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  • Frontline, Overseas Shipholding: Invest Into the Volatility [View article]
    Good synopsis. FRO is far better managed. Last man standing with optimal leverage to spot gets the prize. Conversion to LNG and product is nonsense for FRO. They won't do it. JF has Golar for that.

    Crowding out at yards, slippage, lack of money, orderbook degradation, scrapping...all are converging on an effective supply cut that is underway. By the time the investment community figures this out, the easy money will have been made. Who cares if FRO goes to 18 or 16 from here? Buy more. When it's at 35, 3 years from now, you have a 33% return. Go check Morningstar and see how many funds do that.

    FRO is not going out of business. Ain't no GMR. Accumulate, trade the volatility when available, and wait. FRO management knows what they are doing and now is a good time to get on board. Not three years from now.
    May 7, 2011. 12:36 AM | 2 Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    Danke Clemens. Habe schon laenger bemerkt dass Sie wissen was im Schiffgeschaeft wirklich los ist. Servus.
    May 7, 2011. 12:11 AM | 1 Like Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    Golden Ocean is one of the blue chips on this list. Aside from understanding the numbers, the most important question you must ask:

    Is the company being managed, vigorously and honestly, for the benefit of the shareholders? +/- 75% of the companies on the list do not qualify.
    May 5, 2011. 03:32 PM | Likes Like |Link to Comment
  • John Fredriksen's Largest 2010 Investments Outperform [View article]
    GLNG is using the proceeds to buy 4 new LNG carriers from Samsung, this deal has been negotiated and has been signed or will be shortly.
    Apr 29, 2011. 06:01 PM | Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    No bashing going on.

    Financial analysis has limits in this business. The tell you very little about what owners are going to do. GNK is loaded with debt to the gills, have taken boats off of LTC's even though they said they would not, AND, Peter G. is gambling that he can stay alive long enough on spot with his big Capes and then 'stick it' to the street for doubting him. If you have the stomach for this, buy GNK. The risk you run is that Peter will do a dilutive equity raise and get bent over in other ways, just like at GMR. But those companies will not go under. Just when where the bottom is I have no idea. GNK should have done a raise 6 months ago. The market is already discounting this event.
    Apr 29, 2011. 05:39 PM | 2 Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    BALT, depends. You can calculate what they got in the last three months, unless they badly bid for business. It's not a short. Any rate increase of magnitude, such as a BDI move to 2000, and this will have a squeeze rally into mid teens. Save your money. You want long positions in true survivors going into such a price rise (not going much lower that's for sure) -EXM, Golden Ocean, Torm, NM
    Apr 29, 2011. 05:30 PM | Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    tankers new supply is falling. Containers rising alarmingly quickly. Bulkers still rising, but, there could be some serious slippage coming on. Keep your eye on the second hand market. If those values start to rise, you know the slippage/cancellations are happening at a faster pace.

    Keep in mind also that a containership has a much tighter customer inventory turn to deal with. So they keep the old ones longer, who cares if you're slower...just let the coal pile sit there till he comes back with load #2.
    Apr 29, 2011. 05:25 PM | Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    they will rise on that route for those that have the right fleet configuration. EXM for one and anyone else with capacity in Panamax. But, not sure if this Japan rebuilding will have that much influence.
    Apr 29, 2011. 05:17 PM | Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    there won't be any buyouts. That rarely happens. what may happen is some serious asset selling.
    Apr 29, 2011. 05:12 PM | Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    J,

    Slow sailing isn't just a function of bunker prices. In many cases fuel surcharges are built into charters. Sailing speed is also very much influenced by the charterer's inventory position/planning. The charterers have the upper hand right now and try to push every cost they can on the owners,a s well as wanting them to sail faster if it suits them. If the owners, however, were to to slow sail en masse, then they could reduce effective supply.

    The fact that the marginal players and many small owners not traded are taking freight at below cost to keep alive another few months despite losing money, is an additional pressure point that doesn't, it seem, yet allow for a coordinated slow sail decision.

    The owners have to get to the point where they can charge a premium to sail faster.

    It's a very good question on the economics from the owner's view. I'm not sure that this calculation is often made: amount of fuel burned (saved) traded off against voyage turns. The reason is that revenues are priced on a per days basis unless a COA. Thus, the "spread" is baked into the rate. You're looking at more days on the water, therefore more income. But the rate may very well be lower. That's the real game.

    Heaven is: newest fastest ships, in a rising rate environment.
    Apr 29, 2011. 05:11 PM | Likes Like |Link to Comment
  • A Look at Dry Bulk Company Valuations [View article]
    I'm afraid it isn't that simple. Shipping companies do not lend themselves well to traditional securities analysis. Because I defy anyone to predict rates, and these have 50%+ volatility.

    Let's talk abut some things that matter just as much and then we'll discuss a few names. Supply and demand. Forget this term. In the shipping business, the correct term is Effective supply and demand and the prediction of it, because that is what affects rates, and thus the value of the stocks later on.

    Effective supply is influenced by a number of factors:

    1) current fleet available to sail (exclude drydocks)
    2) aggregate sailing speed, heavily influence by charterers and the collective will of owners. 1 knot slower means 15-20% reduction in effective supply.
    3) deliveries. Few have insight into the options with the yards. Slippage can be substantial.
    4) Steel prices have a substantial influence on scrap activity

    The ES in the tanker market is heading towards equilibrium with demand and fast. New orders are down, a lot. Box orders are crowding out tanker orders at the yards. Slippage is way up. Scrapping is up.

    When the ES hits equilibrium with demand, rates will jump, a lot, and stay there. There is no money to finance another binge.

    Next is management. The right balance between fleet size, segmentation,leverage, operating costs and strategy.

    Frontline is by far the best managed tanker company in the business and, due to its ownership structure, is run for shareholders of which JF is the biggest and he enjoys his dividend just like we do. I do not want to be a Frontline competitor. They are biding their time and managing the ES to equilibrium curve carefully. Right balance between LTC and spot capacity. if you don't like the volatility, then buy SFL, Frontline's banker.

    Bulkers.

    Same thing but different playing field. ES not coming down so fast, but, rates, even at this low level, are positive for the low cost operator.

    Some additional issues: capex. Owners, when they think there is going to be future demand, order ships, they want a bigger fleet to gain extra profits on the fixed costs. But, in a prolonged downturn, where cash is king, you don't want a capex overhang when you don't know how to finance it. Valuation work isn't going to tell you that. Relationships. Matters huge with customers and financiers. Have you burned either before?

    EXM is the low cost operator. No newbuidings, they're done. Loyal customers. Largest bulker in the business. Been around along time. Only 100mm to go for 2011 bookings to get to break even. Spot capacity now is at least 16 vessels and more as additional ones come off in the summer. If rates average what they did last year, then they will hit 360 million in revenues. 300mm is all in cost. Everything. That is 90 cents a share.

    The point is: valuation is useful. Knowing the equity on the balance sheet is more useful. Knowing that the equity won't be risked by management is a must. Now you can determine the staying power.

    Then you need to know where rates are and to buy this equity (via shares) when the rates are abysmal, the stock price is down and the sentiment pure negativity. Do you care how long it takes for a rate snap-back? No. It can happen at any time. You just need to know what happens to EXM at 90 cents in earnings, for example. That pays to wait.

    Company comments:

    EGLE: high leverage. Supramax focus=more leverage. New trading ops in Singapore. More risk (Chinese will look to dominate their trade lanes). You will not be paid for this.

    EXM: solid

    NM: diversified, solid.

    DSX: conservative, will not outperform EXM on a rate rise.

    GNK: gunslingers

    BALT: GNK mud on the boots. When do the GNK boys raid the larder?

    DRYS: Chairman rips off shareholders routinely.

    Golden Ocean (Norway): solid and a sleeper. Serious company.

    Others:

    FRO - the best
    SFL - solid
    GLNG- a bit expensive, best in class
    TNP - solid

    TNK - abused by TK

    DHT - minnow

    GMR - Gunslinger, almost died, could still. Double screwed by sale leaseback and Dahlman Rose in last 3 months. No choice but to bend over.

    OSG - Some of the worst management in the business. But people know it so it goes along for the ride.

    STNG - great company.

    A word about containers...everyone is so giddy about how well they are doing:

    1) rampant ordering, as in out of control
    2) AP Moeller going to take share
    3) Chinese coming fast, will take share

    Be careful out there.
    Apr 28, 2011. 07:22 PM | 10 Likes Like |Link to Comment
  • Doug Kass on today's market action: "Not a dissenting comment on the markets today anywhere - that means, to me, investors will be disappointed over the near term."  [View news story]
    Gentlemen,

    All you need to do is look at international shipping rates for any commodity. These are at decade lows and shipping companies are not getting rates to even cover their costs. This is a world-wide situation. That means there is a demand problem. Few are paying attention.
    Apr 21, 2011. 10:06 AM | 1 Like Like |Link to Comment
  • Gulf Resources: A Compelling Opportunity in the Bromine Market [View article]
    Erik,

    I appreciate your analytics and insights. I have a small position in GFRE/ I'd like to make a few comments and get your thoughts. By way of background, I have been active in China for many years and have an office there. I know how Chinese companies operate as well as the culture. But here are my comments and questions:

    Who advised the co. not to answer questions in the recent conf call? This is totally unprofessional . I have been a board member of public companies in the US and would never have supported this.

    The IR person handling the conf call is definitely not top tier - serious amateur hour. A serious co does not need an IR firm repping a conf call. This is so amateur and flimsy I can hardly stand it. They need a Chinese/American board member to do that call.

    If they are interested in repairing their reputation, why are there no serious western executives on the board?

    Internal controls and Deloitte. Please. This is window dressing. More bad advice. Why pay those fees unless you make the report public in a big way? Or better yet, just do nothing and put the cash where it belongs. The market will figure it out. But "bitten dogs bark"...is that happening here? Probably not, but one could see it that way.

    There is only one thing that matters: cash. Is the cash being made and is flowing from the operating companies to the holding company as it should?

    Who advises the CEO and CFO to exercise options, or be awarded options at a strike price of 4.76? That is not the same as a direct purchase. As a big shareholder of this company the CEO should want the shares to go up. So why engage in really bad PR moves. Is he placating US investors while moving cash to somewhere in China and does not care about the US stock price? Why is no one at GFRE stepping up to make a large CASH purchase of shares?

    It could be they are poor, but I doubt it. So, either they are getting really bad advice, which I suspect, or, they are very cunning and really stealing money.

    But I would recommend a message to the CEO: when you lay down with dogs you wake up with fleas. And this company has, no question about it, been sleeping with a lot of dogs, especially here in the US.

    Perhaps a change of quality in the advisors and board is in order.


    Look forward to your comments.
    Apr 17, 2011. 01:41 AM | Likes Like |Link to Comment
  • FRO - Share incentive program 2011 [View article]
    I don't know what that means but would suggest that this is in line with good thinking at FRO. The strike price in USD is 24.14 at current exchange rates. This simply means that owners are and management are in synch about strategy which is being executed perfectly.

    FRO is the world's no.1 tanker company. They KNOW that rates will turn. It is easy to be scared into thinking otherwise and the shares prices are enough to provide the scare. Fact is, right now there is no serious demand for oil, the price is QE2 driven, with a little Lybia stupor thrown in the mix. newbuilding slippage is increasing and container ship orders in the yards are crowding out tanker orders. Iron ore prices are on the rise. Steel is next. All that adds up to a supply/demand balance for crude boats in the future. So all the smart people fixing charters at these abysmal rates will, rue the day next year. FRO is not playing that game and the owners and management know it.

    Patience my dear Watson.
    Apr 17, 2011. 01:12 AM | Likes Like |Link to Comment
  • How to Profit From Diverging Natural Gas Prices [View article]
    David, could you point out in more detail where FRO has exposure to LNG? I'm a shareholder and not aware of a single LNG carrier in the fleet, unless there are some off-hires of which I'm not aware or the information is buried. I'm a shareholder in the company so would be very interested in this, no mention of LNG has come up in the last few conference calls.

    Frontline's controlling shareholder, John Fredriksen has his LNG exposure through companies Golar LNG and Golar Energy. Golar LNG has a controlling stake in Golar Energy and now an interest in the new MLP just launched to which GLNG sold 4 LNG carriers.

    I'm not sure why LNG exposure would be diluted through FRO. I could see addtional exposure through SFL, which is the defacto merchant banking operation for the Fredriksen companies which also includes SDRL.

    Look forward to clarification. Many thanks.
    Apr 15, 2011. 07:50 PM | 1 Like Like |Link to Comment
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