I will look it over tomorrow, but since it was the parent does anyone have an opinion on if its really as cheap as it looks?
CapivaraCapital,I saw this too and am very interested in the situation. TEU was very clear so started there, but PRGN could be very interesting. If you have the time, please share anything you find.Tom
Re Paragon, it doesn't quite look as strong as TEU purely from a market perspective but the price has taken quite a hammering. TEU has clear revenue stream with all its relatively new vessels chartered out on contracts at above market rates. Paragon doesn't to such an extent and also has vessels on order for delivery in a down market, with coverage declining from 92% in 2011 and 57% in 2012 and 35% in 2013. Ofcourse, it doesn't mean that they won't be able to charter those vessels out at some point beforehand as they have done already with 2 vessels yet to be delivered, according to their media release, so those figures could end up be much better. Paragon also have a slightly different strategy of playing the spot market as well as medium and long term market. But in this market, they may not have a choice, 'beggars can't be choosers' as the saying goes.In short, Paragon has a little more uncertainty than Boxships. Drybulk market is just as volatile as the container market. with things still on way down. Where the market is unreasonably marking down the market capitalisation below book value, always the possibility that the value of those assets can also be marked down very quickly in a falling market, 30% or more and ofcourse renegotiation of charters. Certainly, there are cases of large container ships being ordered at one price, then sold before delivery to another at as much as USD 35m less for a vessel in the USD 150m range.I might look a little closer at this one too, on basis that if there is a large enough gap between market cap and book value, even assuming a large writedown with vessel devaluations, it could be worth considering more. No hurry though, shipping market is not going to shoot up in short term, so only investor sentiment is playing with the price at the moment.
Thanks for the insight. I sat down with the 20f excited to find something. But going in if it doesn't pass as a book value play I'm going to move on. And right at the top of the 20F is the warning that market values for vessels is not only highly volatile but that the volatility is independent from current market conditions. So what I will do when I get around to it is try to get some comps, maybe some recent liquidations and then see where the implied recovery is. Currently focused on a potential special op that I will share a writeup on if it turns out to be interesting.
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