elliot_mllr

Is it Time to Buy Dry Bulk Shippers?

A new entrant, Safe Bulkers, which went public earlier this year and is traded on the NYSE under SB, appears to have its dividends safe at least through 2009 and possibly into 2010.
I think that the highest quality shipping company stock is not a dry bulk company but a container owner and charterer: Sea Span Corp. Sea Span has 35 ships in the water, all chartered, with a average length of seven years left to go, and its first charter doesn't expire for about 5 years.Its most recent ship, acquired this month, is chartered for 12 years. Its fleet is modern and new. It has 33 newbuilds under construction each of which is chartered for 11 or 12 years starting with delivery, which will occur in stages through 2011. Its charterers are of the highest quality. Two are Chinese state-controlled lines, and others such as Maersk and Happag-Lloud have been around for about 100 years, though the Great Depression and two world wars. The only issue is that the company will need between $600-$900 million to pay for all of its newbuilds, and it has said that it will not raise new equity for two years. It has options, however, since about 15 of its vessels are now unencumbered, and it can consider sales-leasebacks, joint ventures, or raising money privately possibly from insiders, on common stock the dividends on which are subordinated to the publicly traded common stock dividends. The stock pays $1.90 in dividends now.