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Castor Maritime: Prepare For Another Equity Offering As Aggressive Fleet Expansion Continues

May 06, 2021 6:21 AM ETCastor Maritime Inc. (CTRM)16 Comments
Henrik Alex profile picture
Henrik Alex


  • Aggressive fleet expansion continues with the company reportedly having committed to purchase 15 additional vessels over the past four weeks alone.
  • Aggregate cash outflows upon delivery are estimated at almost $240 million, thus resulting in the requirement to raise additional equity in a range of $100-$125 million.
  • June 28 deadline for regaining compliance with the Nasdaq $1.00 minimum bid price requirement approaching. Expect the company to conduct a reverse stock split to cure the deficiency.
  • With expectations for both a near-term equity raise and reverse stock split, the shares should be avoided.
  • Investors looking for exposure to dry bulk shipping should rather consider buying shares of proven industry leaders like Star Bulk Carriers, Golden Ocean Group, Genco Shipping & Trading and Eagle Bulk Shipping or taking advantage of the opportunity currently provided at Pangaea Logistics Solutions.

Schiff Segeln Detroit Kanal in den Usa
Photo by 1001slide/E+ via Getty Images

Note: I have covered Castor Maritime (NASDAQ:CTRM) previously, so investors should view this as an update to my earlier articles on the company.

It has been just one month since fast-growing Cyprus-based shipping

This article was written by

Henrik Alex profile picture
I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.I am located in Germany and have worked quite some time as an auditor for PricewaterhouseCoopers before becoming a daytrader almost 20 years ago. During this time, I managed to successfully maneuver the burst of the dotcom bubble and the aftermath of the world trade center attacks as well as the subprime crisis.Despite not being a native speaker, I always try to deliver high quality research to followers and the entire Seeking Alpha community.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (16)

Just ran into this a few minutes ago and gave it a look.

This is my 10 minute opinion so take it for what it's worth.

It looks like after the recent raise the NAV is around .32 cents and earnings for the year will be around .07 cents (no more major stock sales....running with 900M shares outstanding).

Plenty of shipping companies can be had for P/E's around 5 and NAV around 1.

So this will head to at least the .32 to .35 cent range in the short term.

But....with the chart pointed straight down the R/S upcoming odds are this will over correct (and then bounce back to that range).

If it goes low enough it will become worthy of a short term trade...playing for the bounce back up.

The bigger long term question is it really a good idea to be investing in a company spending money buying ships at what most would agree is the top of the shipping cycle (when used ship prices are at their peak)?

Kind of the opposite way you want to do it.....if the goal is make money anyway.

But I get it....no one will give/loan you money at the bottom of the cycle so if you're small and want to expand you take the money at the top and run.

Kind of why the shipping industry has been cyclical since forever....companies like this expand and grow at the top of cycle and then go BK at the bottom (and then it starts all over again).

It's in that 32 to 35 cent range now (after R/S 3.20 to 3.50)....and it's over correcting.

I'll take a shot at this at 3 dollars if the volume drops down and then double down if it hits 2.50.

I'm OK owning it 10% to 30% under NAV....odds are they won't R/S it into oblivion while it's trading under NAV.

If it breaks two I'll take my loss and move on...means something else is up (they are planning to raise cash and then R/S it into oblivion).
Henrik Alex profile picture

That's the big question. Will they continue their aggressive expansion or stop here? They have picked up vessels left and right and according to my calculations, they need more cash to take delivery.
@Henrik Alex

Well, considering the CEO gets paid for growing the fleet rather than the share price, and the fact they will need the money to finance those recent purchases, I'd say odds are they do another raise.

That said I'm still giving it a shot below NAV. The reason is the brokerage house doing the secondary should pump the stock up before they unload those shares.

But even if they don't do that already trading under NAV you have a certain degree of protection against a major move down.
watch CTRM fly to 1.00 in the next 10 days towards June 28. The increase in size of fleet will make them a strong competitor in the sea. looking towards 2.00 followed by a RS 10:1 to maintain stock price at 20 in august. 😊
Good time to buy CTRM below 0.45. Looking at the oversold status everyone can expect a price squeeze coupled with NASDAQ Compliance of minimum 1.00 we expect CTRM to recover 0.20 every week towards June 28.

Time to invest in CTRM 👍
Henrik Alex profile picture

Nonsense. Drybulk futures have been down meaningfully over the past couple of days and the company is still trading above NAV.
@project.megaflex better get out before it drops below 0.1, the outstanding number is beyond imagination
Henrik Alex profile picture

The stock won't drop "below $0.1" given the much higher asset value and expectations of positive cash flows for this year. Moreover, the company is likely going to conduct a reverse stock split next month.
Tokyo Picker profile picture
Another excellent article, Henrik. IF CTRM can get another accretive dilution done obviously they should and will do so. It is good for the company, however painful it may be for shareholders.
headnugg profile picture
Ugh, this company keeps doing stuff that make no sense.
Henrik Alex profile picture

Actually it makes a lot of sense to sell equity above net asset value and buy new vessels at net asset value, particularly given the current state of the charter market.
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