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Comments (39)

Merrill McHenry, CFA profile picture
At Berkshure's annual meeting (broadcast) Buffet was certainly bearish on the airlines having sold all his stakes. “I don’t know that 3-4 years from now people will fly as many passenger miles as they did last year .... you’ve got too many planes." By extension that's bearish for jet fuel/products and oil = brent contango for longer. Therefore bullish for the tankers.
But the oil complex will deal with it in some manner that avoids a permanent contango in both crude and refined products. When that is realized, tanker stocks will be the first to feel that. No contango, no tanker rate spike.
I think they are about to dissolve NE2 and NNA will receive about $52m. I am not sure I have this right. Anyone else have any info on this?
J Mintzmyer profile picture
Yeah that’s what prior filings, management hints, and now the recent $NM 20-F are all suggesting. This is a very big thing for $NNA, unlocks a lot of liquidity which they can use to repurchase bonds at large discounts.
Thank you J for sharing that with us.
Thewaltzy profile picture
You buyIn nna bonds??!?
Nice article. I’ve been trading in and out with a core holding at around 7-7.5 average. I don’t know if I have the stomach for this one, I was frustrated when they issued equity in November probably due to liquidity concerns from the Cosco sanctions... but that was at 8 - if they had any liquidity they could have bought it all back at half that for what would have looked like a genius move, but I suspect they may just not have had it or simply preparing for the big bills coming due. I think I concur with your bottom line, a risky but interesting holding for a smaller portion of the portfolio.
Hohum profile picture
@ Marel - glad you acknowledge the riskiness with this tanker idea. You did pick out the big risk - the senior secure notes that come due in 2021. That said, there are three additional risks that are more immediate
1. In order to complete the Navios Europe I deal, NNA took out a bridge loan that comes due in ... June 2020. That's next month.
2. NNA have a Continuous Offering Program (COP), so NNA mgmt could issue shares in the interim e.g.to cover part of #1. If just 3 M shares were sold via COP, it would be > 20% dilution
3. Do we know the contract aspects of the VLCC newbuilds? In particular, the first two which have 10-year attached charters. With the CV pandemic, it is quite likely yard delivery schedules slip. How is the contract with the charter counter-party written? Is there any wiggle room attached to Sep 2020 and Dec 2020 (start dates of the first two newbuild VLCC contracts)?
Tommy Goula profile picture
Great points Hohum.
terrible management. AVOID!
I DONT know why there is so much disconnect between investors and shippers both dry and oil. It's SO sad they won't even come around for the dividens. I just bought 3 for a safe haven during these times. Tanker stocks have gone up a little then crash back down. Some people have been around this industry for 40, 50 years and never seen rates like this, meanwhile we basically stay FLAT...
damn, that's a heck of a dividend yield! I'm fairly new to investing and just learning to read spreadsheets but that is a giant yield, the quote on webull showes 20.8%
OneBlueSummer profile picture
excellent time to buy more no doubt, in 6 months everyone is gonna be touting "I told you so, I told you so." Thats when its time to sell
StockMarketMorty profile picture
I own NNA. Also have noticed NAT got a passive pump from the CNBC spot and is already being dumped in the few days following. Will it hold up?

IMO, this whole debacle will end up creating a lot of bag holders in the sector. Yes, there will be chance for profits, but timing will be key, because when the switch flips, the tankers will all fall back down together, same as they have been rising, and many will be left holding the bag.
The difference is if $NNA got the same pump that $NAT got it would have been over $100.....small share count makes this ticket move quickly both ways.
It wouldn't have mad a difference. Nobody trusts AF anymore
Incredible aanaysis using so many photos -- pictures can tell everything :)
Rabrandt profile picture
AF and multi bagger stock price do not go together.
tizod profile picture
I agree and cannot invest in AF companies. She routinely screws shareholders and cuts deals that might help her (lord knows only she can figure that out), but have been against good (or logical) corporate actions. AVOID (even pref's, which she has screwed shareholders on as well!).
Pitivier profile picture
I only buy navios if AF is fired or dead and yet I am not a heartless
Hidden Rock Capital profile picture
Interesting article, thank you.
Love all the picture!
It seems rates are coming down fast, though. Last fixtures are listed around 60.000$. Nice rates overall, but it is a bit disappointing to se the 200.000$ rates of only a couple of weeks ago to disappear so fast. On the other hand, product rates are said to be holding.

Regarding this specific ticker, what about corporate governance? Greedy investors can fall prey of greedier owners.
alex.c profile picture
I think that in this crazy market, a lot of people are interpreting the production cuts too optimistically. As a rule OPEC and others have never managed to cut as much as they announced.
Meanwhile the situation has not changed yet. China is having to shut down whole cities again. I looked at FlightTracker24, and there are practically no flights above Europe, and I cannot see the US improving much either.

I am staying Long EURN, TNK, FRO and STNG. I am sure that this latest drop in prices does match the reality of the situation. i.e. We have not seen the end of Storage on water, and the record day rates that come with it!
Bsoidonym profile picture
Interesting article. Thank you.
I stick with $EURN because of VLCC fleet size, solid balance sheet and excellent management.
Marel profile picture
Thanks. EURN is certainly a much better company.
tizod profile picture
I'd add more predictable management, which is specifically key in this particular industry.
Joeri van der Sman profile picture
Thanks marel.

I’m long the Nov 2021 bonds. Those trade at very nice yields. NNA is certainly risky and super leveraged. But high current rates (and recent product tankers rate) , help a lot. Hopefully NNA can buy some of these bonds ar big discounts on the market.
Marel profile picture
Thanks Joeri. Interesting and makes more sense. I will also go long the bonds next week if the large discount to par persists, and retain the small equity position.
Tommy Goula profile picture
Thanks for the article. I have a small position in the common stock, wary of management, so will likely not add more. Hoping for the best.
J Mintzmyer profile picture
Watch out for NE2. Low key nice for $NNA.
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