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will display my here my moves on the nyse/ nasdaq market - after using my own advice first.
  • The Half Failure Theory 0 comments
    Dec 12, 2013 6:27 PM | about stocks: TEU

    The half failure theory is something i have been working on as an investing strategy for a while now. it takes under consideration that companies are not perfect and that is why they Keep on existing. personal interests from all parties and the single largest macro factor will determine the future of a company.

    take for example TEU, a stock with a very strong negative and some would say corrupt management.

    I read complaints about management private gain from the company's debt funding using 9% rate in an insider transaction. I see depreciation by diluted stock. I see management that keeps coming up with excuses for poor results. I see old vessels with limited charter options. I see lucrative 20k+ charter close to termination and more in the coming months. I see concentration of panamax ships which are being replaced by bigger and cheaper vessels. I also see an overflow of vessels that are killing demand for charter rates and very little scraping action taking place in the industry.

    For a rational investor, that and even a little less is more than enough to stop reading just about now.

    And oh yes, the entire balance sheet has nothing to do with reality in every aspect especially including the ships value.

    Now, after all that, I believe there is very little will left for you to invest in the box ships company.

    It is important to say that the company's future is a complete mystery to me.

    The good about this company is that its management (despite their corrupt ways and tremendous skill for finding excuses) are actually very skilled when it comes to ship chartering management and are also engaged with using the rare interest rate for acquiring more ships (which may not always be the wisest deals but still..). As to the financial state of this company I see very par and consistent statistics with the industry after taking into account the new probable charter deals about to be signed and taking out the old lucrative ones. As for the dividend I see a disruption of delivery for a while and later a not so high rate (about 2-3%) after when it comes back in late 2014.

    In total, I believe that the company will take the hit and survive.

    I am no genius! You can probably pick most of what I have mentioned here at an even slicker and more detailed manner on this forum alone.

    So, if that's right the stock price right now reflects the price of a company going slowly down to its grave or maybe up, no one knows for certain. I believe that the TEU price tag represents the lack of visibility of this company's future more than anything else.

    Take that into account when pricing this stock. And if you will, consider the direction of the economy (by year to year standards), and the direction of the demand that will follow. you will find a very par company with very cheap pricing that originates from lack of visibility in the past.

    in the end, it is all about the sum of the largest most significant factors and all the rest pales.

    and of course respecting the half-failure existence.

    Disclosure: I am long TEU.

    Themes: panamax, theory, half failure Stocks: TEU
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