You could be right about the Greek thing - a lot of people look at where a company is and attribute everything about the place to the companies in it. Greece is in trouble, so ... Navios is a risky bet. Given their free cash, along with their current earnings, I think their dividend is sustainable. Of course, if business goes south for shipping, the earnings go south as well, and that would put extra pressure on the free cash.
Also, they have to be careful not to make the same mistake DCIX made, and use up their free cash to buy more ships. DCIX bought the Hanjin Malta earlier this year and blew their cash on the deal. They made up some of the money by selling the Maersk Madrid, but not enough to give extended sustainability to their dividend. If NMM does the same sort of thing, and blow its cash on new ships, it will be time to at least lower the dividend.
There is always a certain element of risk involved in investing in foreign companies - political instability, currency exchange rates, taxation, etc. In general, I avoid foreign investments unless I have a good grasp of the general situation of the company. TGS is included because of its dividend rate, but not because I think it is an excellent investment,
Thank you for pointing out some extra considerations about TGS. jpp
I do not normally give explicit recommendations, whether it is to buy or avoid a company. That is up to the investor him- or her- self. That said, I would have nothing to do with the company, myself. Two years from now, GNI will not even exist as a stock. To buy into it now is to get approximately $30.00 - $35.00 total payoff if you are lucky.
When I wrote my first article about GNI six months ago, it was selling @ ~ $75.00. I gave it an estimated value of $35.00. It is now selling @ $69.00.
I don't know why it is retaining its value, but some shareholders - I think - believe that GNI will do what Mesabi Trust did a couple of years ago, and extend the life of the trust. There is no indication that that can happen. COP is scheduled to take possession of the properties with its own leasing company in April, 2015. Shares from GNI will not transfer to COP - they just completely cease to exist.
To my mind, GNI could be the worst investment one could make at this time. And I do not do shorts or options. I do straight buy and sells, nothing more. I don't even do trading on margin.
Thanks for giving me the opportunity to give another warning about this investment. jpp
If you mean that people will be more inclined to collect during good times, I agree. People love to collect coins, stamps, trading cards, comic books, etc., and they might even collect with an eye to future value of the collectible. During good times, people are not usually looking for a set market value for their collections in terms of a nest egg should they need money - people tend to collect what they find to have intrinsic value to them.
CLCT, however, is not in business to set "intrinsic" value (I mean the value the object has to the collector) - they give an appraisal as to the "market" value of the collectible (what the object is worth to other people). During good times, one is not likely to be inclined to worry about the objective value (the objective value of a silver eagle, for instance, is $1.00 - the value of the silver depends on market conditions), so one is not likely to worry too much about seeking appraisal from CLCT.
During bad times, however, the collectible represents an asset that may need to be liquidated, and to be sure one gets appropriate value for the object, one turns to an outside authority such as CLCT.
There will always be a need for appraisers, but the need is far less in good times than in bad.
I thought you would appreciate the mention - my way of making up for the hard times I gave you - and would still be giving you had DCIX not bought that last ship and then sold one of its oldest ships for scrap. I do not yet know how badly they damaged their free cash situation, but I know it went from >$3.00 per share to ~$0.90.
Who Do You Trust When No One's Trustworthy? [View instapost]
It is good that these services can use technology to keep pace with the quickly changing market conditions, but somewhere there has to be a human, who can identify anomalous data for what it is, who ultimately vets the automated process to make sure that it makes sense, and that it reflects the whole story, and not just the numbers. I mean, when there is a published news release stating explicitly that this is a one-time advance to help investors work around potential tax increases, it doesn't take a Warren Buffet or Carl Icahn to recognize that, in fact, the next year's dividends are going to be lower than in the past.
Rhino Resource Partners LP Announces Sale Of Utica Shale Royalty Interest [View article]
I like the desire to reduce debt (which hasn't been a big issue for RNO, anyway), and acquiring the cash to get Pennyrile up and running, but hate to see the selling off of a cash cow in the Utica Shale. It will bear watching to see if the sale was worth it once Pennyrile starts producing.
Bitcoin: Buyer Beware, This Is A Classic Bubble And Possible Fraud [View article]
Robert -
Thank you for a very interesting article. I have heard of bitcoins for a while, and wondered what the underlying "deal" was. Your article gave me some of the background I needed.
Natural Gas: Sharp Recent Drop In Baker Hughes Gas Rig Count Explained [View article]
Very nice article, Richard. Is it possible that the decrease in gas wells is an indication of dissatisfaction with the price of gas? Not that it could represent an attempt to squeeze production a bit to raise the price, but simply because it is not economically feasible to attempt to increase production in the current market?
I don't know how this winter compares to last winter (which tended to be warmer than normal), but estimates for increased coal use were based in part on a return to colder winter conditions this year, drawing natural gas to heating use, rather than electric production. Thoughts?
Dogging The Dow And S&P 500: A First-Quarter Review [View article]
Sorry - when applied to a stock's performance over a period both terms are used. It seems as if performance is used when talking in terms of the direction of the movement (more often than not) and yield is used when talking about the amount of change in the actual price of the stock.
Since I'm using a fixed point for reference (share price as of Jan 1), and we're talking about the extent of the change in price, I thought it more in keeping with standard practice to cite yield.
I have checked with reliable sources, and the term "yield" can be confusing because it does refer to the change in value of a stock, and it also refers to the relationship of dividend to stock price.
I will try to be a bit clearer, at least when discussing both types of yield. Thanks for bringing this to my attention.
Yeah, I'm sort of in a holding pattern right now - I do think the market is ready for a minor correction, which for me would be most excellent. I'm letting cash accumulate so I can be ready to buy when the correction comes.
Actually, I'm feeling really fine, right now - I haven't looked at my portfolio yet. I like to get my work out of the way before I find out how badly I'm doing. Then, after I look at the 'folio I read the comics, just to get me back into my fantasy world.
CenturyLink Ready To Ride Private Cloud Market Higher [View article]
Nice Article, and well researched. I have been following this company as part of a project, and I have a few comments.
First, their debt/equity > 1 which might not be too bad for the tech industry, but their quick ratio is .5, and their current ratio is .8. Simply put, they don't have the liquidity one would like.
Second, their dividend looks good on paper, but their payout ratio (225) shows their EPS ($1.25) is inadequate, although their cash flow is good enough to cover the shortfall.
Third, its share price has decreased by 10% so far this year. Good dividends don't go far enough to cover that kind of loss in your cost basis.
These considerations have been enough to make me consider this a fairly poor investment compared to some of the other companies out there.
Navios Partners: Strong Management And Fleet At 20% Discount [View article]
J. -
Very nice article, and nicely researched. And let me say that your piece on DCIX was equally researched. I believe that where we differ is on projections - you are willing to give them a great deal of weight, while I tend to look at them, say "okay" and then turn back to the fundamentals. The future hasn't happened yet, so I will go with what I can see right now.
What a company is able to put up in terms of solid numbers is what matters to me - not what it "should be able to do next year."
NMM looks like a good company and most of its numbers are quite nice, but going over the fundamentals, I note that it is only able to scrape together a Quick Ratio of ~ .50, and its current ratio is barely able to make it with ~ 1.10. Granted, its debt/equity ratio is toeing the line at .54, but the QR makes me worry. A low QR makes the company look cash poor.
(I am comparing this with DCIX's D/E of .36, and QR > 10.00, which makes DCIX look fairly cash rich.)
Do you really think the current dividend yield is sustainable? To be sure, NMM is a limited partnership, and they must pay out the required portion of their profits. You point out that they have committed to a dividend of $1.77 for 2013, but commitments are at best intentions, and if profits don't meet the required levels for the "intended" dividend, they are only required to pay out - what - 90% of profits? Certainly, div's will be paid, which is not guaranteed for DCIX, but can NMM - on the basis of its current standing - maintain a 13% yield?
Hewlett-Packard Company: Breaking Up Is Hard To Do [View article]
Zmartmoney-
It all depends on where the board is able to direct the company, and the extent to which the executives can learn from the mistakes of the past. I like the company, and I have used their products in the past. I would like to think they can turn things around. Whitman is no fool - she ran one of the biggest e-tailers in the business, and she has been around. 80% of the board has been updated, and the company is ready to reboot.
But you are right, Dell is more likely to succeed - at least quickly. He'll only have to deal with himself - and only himself to blame if he fails.
Double-Digit Dividend Yields Revisited [View article]
You could be right about the Greek thing - a lot of people look at where a company is and attribute everything about the place to the companies in it. Greece is in trouble, so ... Navios is a risky bet. Given their free cash, along with their current earnings, I think their dividend is sustainable. Of course, if business goes south for shipping, the earnings go south as well, and that would put extra pressure on the free cash.
Also, they have to be careful not to make the same mistake DCIX made, and use up their free cash to buy more ships. DCIX bought the Hanjin Malta earlier this year and blew their cash on the deal. They made up some of the money by selling the Maersk Madrid, but not enough to give extended sustainability to their dividend. If NMM does the same sort of thing, and blow its cash on new ships, it will be time to at least lower the dividend.
Thanks for the comment, and have a good day!
jpp
Double-Digit Dividend Yields Revisited [View article]
There is always a certain element of risk involved in investing in foreign companies - political instability, currency exchange rates, taxation, etc. In general, I avoid foreign investments unless I have a good grasp of the general situation of the company. TGS is included because of its dividend rate, but not because I think it is an excellent investment,
Thank you for pointing out some extra considerations about TGS.
jpp
Double-Digit Dividend Yields Revisited [View article]
I do not normally give explicit recommendations, whether it is to buy or avoid a company. That is up to the investor him- or her- self. That said, I would have nothing to do with the company, myself. Two years from now, GNI will not even exist as a stock. To buy into it now is to get approximately $30.00 - $35.00 total payoff if you are lucky.
When I wrote my first article about GNI six months ago, it was selling @ ~ $75.00. I gave it an estimated value of $35.00. It is now selling @ $69.00.
I don't know why it is retaining its value, but some shareholders - I think - believe that GNI will do what Mesabi Trust did a couple of years ago, and extend the life of the trust. There is no indication that that can happen. COP is scheduled to take possession of the properties with its own leasing company in April, 2015. Shares from GNI will not transfer to COP - they just completely cease to exist.
To my mind, GNI could be the worst investment one could make at this time. And I do not do shorts or options. I do straight buy and sells, nothing more. I don't even do trading on margin.
Thanks for giving me the opportunity to give another warning about this investment.
jpp
Double-Digit Dividend Yields Revisited [View article]
If you mean that people will be more inclined to collect during good times, I agree. People love to collect coins, stamps, trading cards, comic books, etc., and they might even collect with an eye to future value of the collectible. During good times, people are not usually looking for a set market value for their collections in terms of a nest egg should they need money - people tend to collect what they find to have intrinsic value to them.
CLCT, however, is not in business to set "intrinsic" value (I mean the value the object has to the collector) - they give an appraisal as to the "market" value of the collectible (what the object is worth to other people). During good times, one is not likely to be inclined to worry about the objective value (the objective value of a silver eagle, for instance, is $1.00 - the value of the silver depends on market conditions), so one is not likely to worry too much about seeking appraisal from CLCT.
During bad times, however, the collectible represents an asset that may need to be liquidated, and to be sure one gets appropriate value for the object, one turns to an outside authority such as CLCT.
There will always be a need for appraisers, but the need is far less in good times than in bad.
Thanks for an interesting comment
jpp
Double-Digit Dividend Yields Revisited [View article]
I look forward to your follow up.
jpp
Who Do You Trust When No One's Trustworthy? [View instapost]
Rhino Resource Partners LP Announces Sale Of Utica Shale Royalty Interest [View article]
Bitcoin: Buyer Beware, This Is A Classic Bubble And Possible Fraud [View article]
Thank you for a very interesting article. I have heard of bitcoins for a while, and wondered what the underlying "deal" was. Your article gave me some of the background I needed.
I'll stick with real money.
jpp
Natural Gas: Sharp Recent Drop In Baker Hughes Gas Rig Count Explained [View article]
I don't know how this winter compares to last winter (which tended to be warmer than normal), but estimates for increased coal use were based in part on a return to colder winter conditions this year, drawing natural gas to heating use, rather than electric production. Thoughts?
jpp
Dogging The Dow And S&P 500: A First-Quarter Review [View article]
Since I'm using a fixed point for reference (share price as of Jan 1), and we're talking about the extent of the change in price, I thought it more in keeping with standard practice to cite yield.
I have checked with reliable sources, and the term "yield" can be confusing because it does refer to the change in value of a stock, and it also refers to the relationship of dividend to stock price.
I will try to be a bit clearer, at least when discussing both types of yield. Thanks for bringing this to my attention.
jpp
Hey, Can I Vent? [View instapost]
Hey, Can I Vent? [View instapost]
Actually, I'm feeling really fine, right now - I haven't looked at my portfolio yet. I like to get my work out of the way before I find out how badly I'm doing. Then, after I look at the 'folio I read the comics, just to get me back into my fantasy world.
Glad you appreciated the blog.
jpp
CenturyLink Ready To Ride Private Cloud Market Higher [View article]
First, their debt/equity > 1 which might not be too bad for the tech industry, but their quick ratio is .5, and their current ratio is .8. Simply put, they don't have the liquidity one would like.
Second, their dividend looks good on paper, but their payout ratio (225) shows their EPS ($1.25) is inadequate, although their cash flow is good enough to cover the shortfall.
Third, its share price has decreased by 10% so far this year. Good dividends don't go far enough to cover that kind of loss in your cost basis.
These considerations have been enough to make me consider this a fairly poor investment compared to some of the other companies out there.
Navios Partners: Strong Management And Fleet At 20% Discount [View article]
Very nice article, and nicely researched. And let me say that your piece on DCIX was equally researched. I believe that where we differ is on projections - you are willing to give them a great deal of weight, while I tend to look at them, say "okay" and then turn back to the fundamentals. The future hasn't happened yet, so I will go with what I can see right now.
What a company is able to put up in terms of solid numbers is what matters to me - not what it "should be able to do next year."
NMM looks like a good company and most of its numbers are quite nice, but going over the fundamentals, I note that it is only able to scrape together a Quick Ratio of ~ .50, and its current ratio is barely able to make it with ~ 1.10. Granted, its debt/equity ratio is toeing the line at .54, but the QR makes me worry. A low QR makes the company look cash poor.
(I am comparing this with DCIX's D/E of .36, and QR > 10.00, which makes DCIX look fairly cash rich.)
Do you really think the current dividend yield is sustainable? To be sure, NMM is a limited partnership, and they must pay out the required portion of their profits. You point out that they have committed to a dividend of $1.77 for 2013, but commitments are at best intentions, and if profits don't meet the required levels for the "intended" dividend, they are only required to pay out - what - 90% of profits? Certainly, div's will be paid, which is not guaranteed for DCIX, but can NMM - on the basis of its current standing - maintain a 13% yield?
Hewlett-Packard Company: Breaking Up Is Hard To Do [View article]
It all depends on where the board is able to direct the company, and the extent to which the executives can learn from the mistakes of the past. I like the company, and I have used their products in the past. I would like to think they can turn things around. Whitman is no fool - she ran one of the biggest e-tailers in the business, and she has been around. 80% of the board has been updated, and the company is ready to reboot.
But you are right, Dell is more likely to succeed - at least quickly. He'll only have to deal with himself - and only himself to blame if he fails.