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No. of Recommendations: 2

Excellent as usual.

There are several aspects of their loan agreements that I think might place restrictions on cash, although the correct answer is "I'm not sure."

1. Various of their borrowings (mostly on the vessels) are secured by the individual vessels, or in July, 2010 secured by their aggregated vessels plus the assignment of charters on these vessels. It would seem prudent to restrict cash to pay for these loans.

2. Certain of the loan agreements include loan-to-value clauses that could require the Company to post collateral or prepay a portion of the outstanding borrowings should the value of the vessels decrease below a desired level. This too would be a prudent restriction of cash given the decrease in vessel values.

Which of your information and the annual report convinced me to buy?

a) The are a seriously undervalued asset. With cash and a good management team I don't think they are a cigar butt.

b) As I've said, I think this industry is at a low EVEN IF the stock market should drop further.

c) Their cash flow is in a relatively positive condition.

d) Most of the bad news is factored in. They improved cash flow by eliminating the dividend (I got in a little early with my first buy).

e) My very limited knowledge of their business says that if oil rises they may benefit, but they may also benefit if it falls, because China and others may increase their influx of oil. Since their MAJOR goal is to keep their ships working there is some benefit to either scenario. In addition, with a potentially weakening dollar, commodity prices should rise, while it's hard NOT to rely on their dry ship products. I also like the diversity of ships.

f) I like their management. Mostly FRO graduates.

g) I absolutely agree that there is no hurry to invest in this. I think it is a two to four year investment before significant increases do come. As I said, I think FRO has more upside, but got away from me in the low $3's.

h) This is NOT my "egg money." It's a more speculative small part of my individual stock and junk bond sandbox. I almost sold it with this rise and the expectation that it could go lower with a major correction. Haven't yet!

Again, thanks HoHum!

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