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Author: StevnFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1933  
Subject: NAT Date: 3/10/2005 8:56 AM
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Has anyone got any idea why NAT generally seems to be priced low.

It typically pays out more in dividends than it earns.

Year	EPS	Div	RetE	Price	Yield
12/04	4.05	4.84	-0.79	39.05	12%
12/03	2.89	3.05	-0.16	15.05	20%
12/02	0.91	1.35	-0.44	13.54	10%
12/01	2.00	3.87	-1.87	13.85	28%
12/00	2.85	2.56	0.29	20	13%
12/99	0.59	1.34	-0.75	10.63	13%
12/98	0.89	1.39	-0.50	11.5	12%
12/97	0.27	0.30	-0.03	16.5	2%

The price column lists the closing price for the year.

Current price is 46.75.  The dividends over the last 12 months totalled 
5.31 giving a yield of over 11%.

It is not common to find a company with a consistent yield > 10%.

If going forward, this company continued to give a dividend equal to 
the average of the last 5 years, one could expect a dividend of 3.13.  
This would give a yield of 6.7% on the current price assuming no growth 
in dividend, but this history shows a peak to peak growth of dividends 
from 1998 to 2001 of 178% (41% per year) and from 2001 to 2004, a 
growth of 25% (7.7% per year).

It would appear to be a reasonable yield with no growth and growth 
(which seems a fair possibility) would be the icing on the cake.

One very relevant piece of information is that they are floating extra 
stock increasing the shares out by maybe 35%.  The offer price is 
49.50.  This may flood the market for a while, but it looks like an 
interesting one to watch.

StevnFool
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Author: StevnFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1871 of 1933
Subject: Re: NAT Date: 3/10/2005 12:38 PM
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What I have said in relation to issuance of additional shares is not quite correct. There have been two recent floats which I think bring the share count from over 9 million to over 16 million. Prior to this the company operated three vessels. The revenue from the additional shares is for financing three additional vessels with minimal use of debt. It would appear that if the three new vessels can generate the same inclome as the original three, then the revenue per share should increase marginally. 16/9 = 1.8. Twice the number of vessels with 1.8 times the number of shares means that each share owns 11% more vessels than it did before.

Comments welcome. Hopefully someone knows a lot about shipping who may shed some light on the risks. The prospectus for the latest share issue points out several times the volatile nature of spot shipping rates.

StevnFool

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Author: StevnFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1872 of 1933
Subject: Re: NAT Date: 3/11/2005 8:17 AM
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Having looked at this a bit more, I think that the high yield reflects two things.

1. Income from shipping is extremely volatile.
2. The current income is probably above normal due the the current high oil price (i.e. high demand for shipping oil long distance).

I think the best way would be to try and figure out the "normal" dividends. This company was really only getting established in 1997 so I think we could ignore the dividends up to that.

The average dividend per share for the 7 years from 1998 to 2004 is $2.63

If we assume that going forward, each share owns 11% more vessels than in the past, then the normal dividend going forward should be $2.92

If we require a "Normal" yield of 10%, this gives a share valuation of $29.20.

I think this would be a reasonable purchase a $29.20 per share.

This would represent a TTM yield of 18%

I don't know how much it helps, but I work for an equipment supplier to the oil industry. The biggest developments in the world over the last few years and going forward for offshore oil development is off West Africa (Nigeria, EG and Angola are the biggest). There is no pipeline infrastructure for this production. It will all be transported by tanker vessels.

StevnFool

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Author: yoda83 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1873 of 1933
Subject: Re: NAT Date: 3/11/2005 12:21 PM
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obviously, you've taken a deeper look at NAT than i have, but the most recent balance sheet i found was for 12/31/03. and it wasnt pretty (but i know nothing about NAT or its industry). im sure you're using more current numbers. where are you getting these from?

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Author: StevnFool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1874 of 1933
Subject: Re: NAT Date: 3/11/2005 12:34 PM
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obviously, you've taken a deeper look at NAT than i have, but the most recent balance sheet i found was for 12/31/03. and it wasnt pretty (but i know nothing about NAT or its industry). im sure you're using more current numbers. where are you getting these from?

http://yahoo.investor.reuters.com/GoTo.aspx?nss=yahoo&ticker=NAT.N&.t=/stocks/financialinfo/statements/balancesheet/quarterly

Bear in mind that virtually all of this company's assets are the vessels they own. Almost all cash is paid out in dividends - hence very low current assets and current liabilities.

StevnFool

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Author: yoda83 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1875 of 1933
Subject: Re: NAT Date: 3/11/2005 1:02 PM
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well, the balance sheet is much improved over what i was looking at... funny thing is, on yahoo finance, it shows that $30-31M of LT Debt as a current liability as of 12/31/03. http://finance.yahoo.com/q/bs?s=NAT&annual

but from the link you gave me, it was still classified as long term. oh well, i guess we gotta take this info w/ a grain of salt. and it looks like NAT has paid it off anyway, so i guess it doesnt matter.

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