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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 459185  
Subject: Hat tip to Hohum Date: 3/22/2013 10:18 AM
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Over the years, Hohum's posts on the shipping sector caused me to make up a Stockcharts portfolio of shipping companies. Yesterday a friend of mine called me to ask what I thought about the big move in EXM, EGLE, & SHIP. I told him it certainly looked like a beginning of a turnaround in the shipping stocks, but that I wouldn't be buying any of those particular companies that he had mentioned.

After the call, I looked at the rest of the charts in that portfolio, selected 7 companies whose charts looked as if there might be some upside, then put those symbols through my spreadsheet. Two companies came back with the strongest spreadsheets that I believe I have ever seen for shipping companies: DSX & VLCCF. I ended up buying some VLCCF just so that I'd have a more personal prod to have me watching that sector a bit more.

I wouldn't have even looked at the sector too much if it hadn't been for HoHums regular posting of updates and thoughts for that sector.

So, Thanks Hohum!

Oh, and BTW, if you have a list of the symbols you follow in that sector, I'd appreciate it if you would post them so I can add any I don't already have to that portfolio for future reviews.

Poz
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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418640 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 10:45 AM
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Poz

Just a thought on the subject of tankers. The US has gone from importing 60% on its oil needs mostly by tanker to importing just 32% and much of that by pipeline. The new customer for much of that oil is China that is a much shorter run for tankers and also receives oil by pipeline from some suppliers.

I have not really spent as much time as I would like to look at the numbers but this may be part of what is behind the fall in tanker stocks?


Any <still working on the coal vs Nat gas for electrical power in the US thingy> mouse

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418648 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 12:45 PM
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Just a thought on the subject of tankers. The US has gone from importing 60% on its oil needs mostly by tanker to importing just 32% and much of that by pipeline. The new customer for much of that oil is China that is a much shorter run for tankers and also receives oil by pipeline from some suppliers.

I have not really spent as much time as I would like to look at the numbers but this may be part of what is behind the fall in tanker stocks?


Well, Hohum's really the expert in this area, not I. However, I think the shipping industry entered into a new build frenzy which was exacerbated by China building many of its own ships. The overcapacity drove down the day rates to very unprofitable levels and that then drove the share prices of shipping companies into the dirt.

The best of the shipping companies pared back and refocused (as capitalism is intended to do in such environments) and now a few of them have debt levels and revenue streams that merit consideration.

Poz

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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418651 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 1:16 PM
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Poz

As I suggested, "this may be part of what is behind the fall in tanker stocks?", otherwise I have to agree Hohum is the duty boat guy. }};-D


Any <considered boats a place to park the helo and grab a meal and nap> mouse

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418655 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 2:58 PM
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I wouldn't have even looked at the sector too much if it hadn't been for HoHums regular posting of updates and thoughts for that sector.

So, Thanks Hohum!


Thanks for the kind word. I've actually been focused on tankers and had mostly ignored the dry
bulk space until the last few days.

Oh, and BTW, if you have a list of the symbols you follow in that sector, I'd appreciate it if you would post them so I can add any I don't already have to that portfolio for future reviews.

Poz


Funny you should ask. I said "mostly ignored" with good reason. Someone else asked me for
a list of dry bulk shippers 4 months ago. Actually, FreeThinkerKW asked me my opinion
on shipping in general though the title said dry bulk faves, and my response touched
on four dry bulk idea (NM, NMM, DSX, and SB). Note my comment,
The result are mostly penny slot machines- you could pull
the lever and get lucky.

http://boards.fool.com/hohum-i-know-you-deep-knowledge-of-th...

In general, the penny ideas e.g. Excel (EXM), and Eagle Bulk (EGLE) are the ones that have been
doing well, or really well, since the beginning of March 2013

Here's my first comment on dry bulk since FreeThinkerKW asked me about the subject back
in Nov 2012. Posted on the "Value Hounds" board after starting to poke at Diana Shipping (DSX)
http://boards.fool.com/cramers-shipping-calls-30601806.aspx

--

Okay, so that's six dry bulk ideas- NM, NMM, DSX, SB, EXM, and EGLE. Holler if you want
more names- there are a whole bunch of names trading under $4/sh

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418657 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 3:40 PM
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Just a thought on the subject of tankers. The US has gone from importing 60% on its oil
needs mostly by tanker to importing just 32% and much of that by pipeline. The new customer
for much of that oil is China that is a much shorter run for tankers and also receives oil by
pipeline from some suppliers.


Hah! If it were only that easy. The crude oil tanker market was healthy the first half of
2012, but fell apart for most of the second half of 2012. Not sure if it was the biggest reason.
But a major reason for this was the newly-started Motiva expansion project going off-line
in mid 2012. Note that Motiva is in the US and a significant part of its supply came from ...
Saudi Arabia. Why is this significant? Three reasons
1. Sending VLCCs West helped soak up the over capacity of the crude tanker fleet. From the
Middle-East, round-trip to Japan or China is 40-45 days, while to the US Gulf it is 70-75 days
2. Motiva refinery owners are Saudi Arabia and Shell
3. Use of "trinangulation" for VLCC operations. In a nutshell, triangulation reduces
the amount of ballast time in VLCC operations

I have not really spent as much time as I would like to look at the numbers but this may be part of what is behind the fall in tanker stocks?

I have not really spent as much time as I would like to look at the numbers but this may be
part of what is behind the fall in tanker stocks?


The fall in tanker stocks really depends on one's time-frame. From 5 years, Yes, most
tanker companies have seen major price drops. From the start of the year or early Dec 2012,
Navios Maritime Acquisition Corp (NNA) has done just fine (HoHum should know, it was his largest
tanker position until two days ago AND his METAR Contest pick :) ). With a Jim Cramer plug,
Nordic American Tankers (NAT) has gotten a nice bounce. Then there's troubled tanker company
Overseas Shipping Group (OSGIQ), winding its way through Bankruptcy court, but up about 250%
in March 2013!

I haven't even got to Product Tankers yet ...

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418659 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 4:17 PM
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Okay, so that's six dry bulk ideas- NM, NMM, DSX, SB, EXM, and EGLE. Holler if you want
more names- there are a whole bunch of names trading under $4/sh


OK, I'm HOLLERIN!!! (lol)

I'm only interested in US exchange trading, non-pinksheet.

To perhaps save you some typing, here's the list I have: ALEX, BALT, DHT, DRYS, DSX, EGLE, EXM, FRO, NAT, NM, NMM, OSG, PRGN, SBLK, SFL, SSW, TGP, TK, TNK, TOO, TRMD, VLCCF.

Thanks again,

Poz

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418664 of 459185
Subject: Re: Hat tip to Hohum Date: 3/22/2013 5:19 PM
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To perhaps save you some typing, here's the list I have: ALEX, BALT, DHT, DRYS, DSX, EGLE, EXM, FRO, NAT, NM, NMM, OSG, PRGN, SBLK, SFL, SSW, TGP, TK, TNK, TOO, TRMD, VLCCF.

On the dry bulk side: Additional names include ESEA, FREE, GNK, ISH, SB, SHIP, ULTR, NEWL

LNG shipping: GLOG, GMLP, GLNG

Tankers: NNA, STNG, TNP, TOPS, CPLP

Real niche player: GASS (smaller LPG tankers). Tim alluded to the US and its reduced import needs
(for consumption, but not necessarily on the refining side). There is some particular law or
regulations that prohibits US crude oil exports. But, supposedly, there is no law against
export of LPG. That's an associated product from oil and gas wells and could become an
energy resources that is increasingly exported.

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418694 of 459185
Subject: Re: Hat tip to Hohum Date: 3/23/2013 9:33 AM
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Hohum

Thank you for both the response where you gave me the link to your previous discussion with Free thinker & for the latest post where you gave me even more companies. I have them all added into the one Stockcharts portfolio now and will periodically look at them. I like looking at sectors that are so far off their highs that everyone knows you have to be an idiot to consider them. I qualify!

Poz

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418711 of 459185
Subject: Re: Hat tip to Hohum Date: 3/23/2013 1:53 PM
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Thank you for both the response where you gave me the link to your previous discussion with
Free thinker & for the latest post where you gave me even more companies. I have them all added
into the one Stockcharts portfolio now and will periodically look at them. I like looking at
sectors that are so far off their highs that everyone knows you have to be an idiot to
consider them. I qualify!

Poz


I have to confess that I have not been diligent enough on the dry bulk side over the last 6-12
months. I had a general idea of what was going on in the sector, but nowhere near my
understanding on the tanker sector. I do think my November observations are still valid- the four
more stable entities among the dry bulk companies are DSX, NMM, NM & SB, with the rest being
more like slot machines (Pull the lever, perhaps get lucky). VLCCF announced the sale of
its last tanker, and its fleet is now strictly dry bulk Cape vessels. I would put them in
the first group as the company has managed its debt load quite well. VLCCF paid a dividend
for Q4 2012, but I have to think the payout, or more specifically, the payout level, is
at-risk going forward.

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418716 of 459185
Subject: Re: Hat tip to Hohum Date: 3/23/2013 4:12 PM
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I do think my November observations are still valid- the four more stable entities among the dry bulk companies are DSX, NMM, NM & SB, with the rest being more like slot machines (Pull the lever, perhaps get lucky). VLCCF announced the sale of its last tanker, and its fleet is now strictly dry bulk Cape vessels. I would put them in the first group as the company has managed its debt load quite well. VLCCF paid a dividend for Q4 2012, but I have to think the payout, or more specifically, the payout level, is at-risk going forward.

One of my hot buttons lately is debt ratio. I just can't help but feel very exposed when I think of buying an entity with a high debt ratio when I believe we are at the end of a 30 year cycle of declining rates.

I define high debt ratio as anything greater than .4 and the closer to zero the more likely I am to breathe easily.

SB has a debt ratio of 1.45 and NM has one of 1.16 so they are both off of my radar.....I'm probably overlooking some very significant business reasons in this approach, but there are so many opportunities and so little money....

I struck NMM off of the list because it seems to be pretty free with increasing the number of shares outstanding. Three years ago it increased shares by 96%, two years ago by 34.7%, and last year by 27.7%. So even if I got the 12.4% dividend going forward, it isn't enough compensation for the dilution of my ownership interest. Additionally, by my warped way of determining free cash flow, it looks like the last 4 quarters garnered $.81/share which isn't near enough to pay the $1.77/share dividend so either the dividend drops big time or they engage in borrowing to pay it.

In defense of NMM their revenues have increased substantially but not nearly as fast as the share dilution, so it is a pass for me.

As far as VLCCF's cash flow, I get about $.84/share while their dividend is $.70/share, so perhaps it is in danger, but perhaps not.

DSX looked to be about fairly valued for its cash flow.

I intend to do my spreadsheets for the entire list of shippers now residing in my stockcharts portfolio, if I see any that look tasty, I let you know which ones and why.

Poz

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418723 of 459185
Subject: Re: Hat tip to Hohum Date: 3/23/2013 9:42 PM
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I intend to do my spreadsheets for the entire list of shippers now residing in my stockcharts portfolio, if I see any that look tasty, I let you know which ones and why.

Poz



Don't forget intangibles, some shipping companies have them.
- Why did I put SB in the safer group? Insider ownership stake + industrious family
(Hajiannou's)

- Why do I consider VLCCF in the safer group? Company has turned over entire fleet operations
to Frontline (FRO) management team (Fleet managed a lot more conservatively than
FRO's fleet ).

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Author: ThyPeace Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418885 of 459185
Subject: Re: Hat tip to Hohum Date: 3/25/2013 2:25 PM
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I would like to thank everyone who's posted on this thread. I realize that this is a sector and stock specific conversation, so not really Macro-related. Even so, there is much that can be learned from a thread like this one -- thought processes, information about a specific sector and its relation to others, even (possibly) ways to use macro trends to make money.

It's nice to see.

ThyPeace, has nothing much to add except to wish that one of her favorite companies had not sold off its shipbuilding division, but that's neither here nor there. (MTW. They think they've gotten smart with food service and cranes. But ships were good to them for a long time.)

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 418901 of 459185
Subject: Re: Hat tip to Hohum Date: 3/25/2013 4:57 PM
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I would like to thank everyone who's posted on this thread. I realize that this is a sector
and stock specific conversation, so not really Macro-related. Even so, there is much that can
be learned from a thread like this one -- thought processes, information about a specific sector
and its relation to others, even (possibly) ways to use macro trends to make money.

It's nice to see.


Well okay, most of the thread has not been Macro-related, but there are elements that are
macro-related, and Tim443 alluded to one of them.

While the US is still a major energy importer, with the Bakken energy and shale gas discoveries,
the country has reduced its overall dependency on foreign energy. As Bakken production grows
the US can reduce its foreign dependence even more. Reduced US dependency on oil imports
can have a major impact on the tanker market, in particular, tanker rates. As an example,
I do think the Motiva refinery going offline in the second half of 2012 had some impact on rates
for crude oil tankers.


Since PosFCF mentioned my prior shipping posts, and I haven't commented on the sector
in recent months (prior to this thread), I guess I should probably post something on shipping.

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Author: sailrmac Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 419410 of 459185
Subject: Re: Hat tip to Hohum Date: 4/1/2013 6:20 PM
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I think you wanted symbols (you may have just been asking Hohum). Anyway two I own are DCIX and NM

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Author: sailrmac Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 419411 of 459185
Subject: Re: Hat tip to Hohum Date: 4/1/2013 6:23 PM
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What Tim443 said, less tanker use due to fracking in US; plus let me add that China has significant shale oil reserves it has yet to develop (needs to steal the technology first).

Long term I don't like the macroeconomic environment for tankers.

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