- I was thinking of my reluctance to invest in NAT.- I was thinking of Cramer's comments after NAT's Q4 miss.- I had kicked the tires a few months back, maybe something changed.What about NAT?Cramer tries to sooth his groupies, saying things are still good.http://www.cnbc.com/id/35369658/site/14081545?__source=yahoo...But these people fail to see the virtuous cycle at work here, Cramer said. Nordic American uses the offering money to buy new tankers, which generates more profits that are returned to shareholders in the form of a dividend. As long as the growth in business outweighs the diluted share price, then there’s no problem. And that was the case in this most recent secondary: The 10% dilution falls far below the 22% growth in the company’s fleet as it adds another four vessels. Why is the comparison share dilution vs fleet growth?In 2009, 4 vessels were purchased, and 3 vessels even contributed varying degrees of revenue.Yet, annual revenue slipped and the dividend kept getting cut (88c => 50c => 10c => 25c) Oh, there was 16% share dilution and 28% fleet growth last year.Each vessel acquired in 2009 cost at least $52M, so I question whether $137M will be enough toacquire 4 vessels of similar vintage, older perhaps. All these things illustrate Cramer just accepting the company line.Nordic American is expected to pay out dividends worth $2.47 a share in 2010 and $2.83 a share in 2011. That’s an implied, and more than respectable, 8.6% or 9.8% yield, respectively, and the revenues are there to pay it. Cramer said he hopes the consensus is right, especially given that NAT is paying only 25 cents a quarter right now. Let's put that $2.47/sh in context.The company has 46.8M shares outstanding, so the expected dividend payout is $115.6M for 2010. The total revenue last year was $115.4M, before expenses.Okay, let's try this another way. Although, there's only 15 vessels operating currently, let's call it 17 for the additions in the first half. Let's assume the vessels are employed 360 days.So, $115.6M/(17*360) = $18,889/day per Suezmax to just generate dividend income. The company likes using that $10k/day number for operating costs.So maybe one says, $28,889/day provides that dividend. That's not really a low hurdle.Perhaps the NAT's dividend payout imitates last year. A healthy Q1 dividend, then a decline.Just that the decline is not as severe as last year. I can like how a company operates, how it is managed, but it still might not be compelling enough.That's where I'm at with NAT. Even with its concerns, I somehow find FRO more compelling at its current price. They will be reporting in a few weeks, and might even be able to shed somelight on NAT (FRO charters 7 vessels from NAT, and participates in the Gemini pool.One can use this to baseline a company like NAT, since its an all Suezmax fleet.Probably more than 2 cents,Hohum
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