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Nordic American Tankers: Remain Constructive On Shares

Mar. 02, 2023 10:21 AM ETNordic American Tankers Limited (NAT)12 Comments
Macrotips Trading profile picture
Macrotips Trading


  • NAT owns a fleet of 19 Suezmax tankers.
  • NAT's fleet continues to benefit from Russian oil disruptions and low global fleet growth, which has allowed tanker rates to stay 'higher for longer'.
  • NAT is scheduled to pay $0.15 / share in dividends for Q4/2022. With strong profitability expected in 2023, NAT could continue to pay elevated dividends for many quarters.
Aerial view Crude oil tanker


I recently wrote a positive update on Teekay Tankers Ltd. (TNK), as Russian oil disruptions have caused tanker rates to stay elevated while full shipyards mean the situation can extend for years. The same fundamental drivers for Teekay also

This article was written by

Macrotips Trading profile picture
I spent 5 years as a co-founder and hedge fund CIO / manager. Before that, I was a hedge fund analyst/portfolio manager at a leading Canadian alternative asset manager. I write articles as part of my own due diligence on the stocks that I find interesting, for one reason or another.Follow me on twitter for my thoughts on macro trends.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NAT, TNK either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (12)

Dear Herb

I wanted to have your feedback on below and see if you are willing to adjust your strategy of paying such high dividend yield on the stock to finally generate and build enough cash on the balance sheet to:

A) Buy outright some new ships without being forced to put them on long term time charter agreements

B) Build cash (which can be invested in high paying short term treasuries) to lower over time your overall debt and enable NAT to negotiate better terms with ship builder and financing firms. (Note: I am aware some of NAT current loans are on a fixed reimbursement schedule).

C) Enable NAT to withstand the future inevitable cyclical downturns in your industry

With all due respect, you have been running NAT with the strategy of high dividend yield which has unfortunately forced NAT to dilute shareholders by approximately 30% in the past few years via ATM offerings and provided a subpar overall returns to shareholders.

This too high of a dividend yield strategy has prevented you for renewing your fleet which now counts now (7) ships built between 2003-2005. If these ships are not sold, they will require dry-docking for at least 90 days for their mandatory upcoming “20-year special surveys.” See below list:

Nordic Apollo 2003
Nordic Pollux 2003
Nordic Castor 2004
Nordic Luna 2004
Nordic Freedom 2004
Nordic Skier 2005
Nordic Sprinter 2005

We hope you are in the process of considering selling some of the older ships as the Russian -Ukraine conflict has made such ships more valuable to be disposed on the secondary market instead of scrapping them.

We understand you might think that by taking this new strategy of reducing debt and ordering some new boats without long term leased back terms might not be appreciated by the market. However, I believe the market place would view this positively as it would demonstrate NAT management is willing to right the business strategy and put the company in a better long term footing.

This new strategy might in the future help NAT avoid purchasing ships on very long term leased back terms which has then forced NAT to earn substantially lower charter rates as with your (5) newest NAT ships.

We have noticed on Ocean Yield's website. They list ownership of five (5) of NAT newest Suezmaxes. All the new ships listed by NAT are actually owned by Ocean Yield and leased back to NAT at fixed terms.

4x time charter
Oman Trading ==> Nordic Harrier and Nordic Hunter committed for almost six years ==> below $25,000
Equinor ==> Nordic Cygnus comitted until the end of Q2 with a 12 month option for the charterer on top ==> $20,000
Unipec ==> Nordic Vega committed until the end of Q3 ==> $30,000

We hope you and your board will consider:

A) Lowering NAT overstretched dividend payout strategy to build up substantial cash

B) Opportunistically selling on the secondary market some of the older ships

C) Order new ships (2) without being forced into poor long term leased back terms

I look forward to your feedback.
Hohum profile picture
NAT has more than a few old vessels - 7, to be exact.
NAT might be able to pay off the Beal Bank debt in the next year or so. But it will likely come at the cost of fleet shrinkage. That would impact dividend capacity.
NAT issued this today.

GlobeNewswire March 20, 2023

Dear Shareholders and Investors,

There is nervousness in the stock markets. This nervousness does not impact Nordic American Tankers Ltd (NAT).

We would like to highlight three observations on the market for oil transportation:

Firstly: We are not affected by the banking crisis that we see.

Secondly: We are not affected by the fluctuations in the oil price.

Thirdly: The market for our vessels continue to be strong

When we experienced uncertainty in the banking world in 2008, the order book for new suezmax tankers the following months and years stood at about 50% of the existing fleet. At this time, the corresponding number is at a low level of 2%, the lowest we have seen for decades. The supply side of our market is protected for years to come, thereby strengthening the fundamentals.

The tonnage balance, the demand and supply of ships are in our favor. Political uncertainty is good for our business. NAT has quality ships, quality operations and not least quality customers. Major oil companies account for about 50% of the total NAT business.


Herbjorn Hansson

Founder, Chairman & CEO
jeffkad profile picture
@Gebhardt1 damn. being aggressive in trying to tamp down fear. gotta love it
Macrotips Trading profile picture
@Gebhardt1 nice article. But NAT doesn't ship diesel. It transports crude. STNG does product.
@Macrotips Trading Absolutely correct. Meant to post this one. Similar issues.
jeffkad profile picture
@Gebhardt1 An interesting Bloomberg article suggests that both Russian crude and refined product tankers are backing up waiting for discharge (not sure if port congestion or something else). In any event, also good for both clean and dirty tanker rates as the floaters get paid to wait, and balance of available fleet dwindles (meaning higher rates).
reutthe profile picture
So given your thesis of a couple more good quarters, what could we possible see for NAT share price? Today we have $4.53 mid-day as I write this, is $5 or $6 in the cards? The jump to $.15 for the next dividend is a huge increase (300%), I would think a much higher price is warranted.
catsaunders financial profile picture
we like the dry as well, sb ie:>)
sgtgibby profile picture
A very thoughtful and well researched article.
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