EGLE and other shipping stocks

[eyetri2]

I guess this message is focused mostly to brewer, but if other people own these stocks, please chime in. I have finally done a perusal of the shipping industry and have narrowed it down to several stocks. My problem now is what metrics do you use to qualify is this a good investment or bad. I'll bring up some key points I used:

# of ships, size of ships
Avg age of fleet
Dry bulk ship vs oil/liquids
Spot market vs charter - what % of each
how long are the charters
ttm utilization %
Dividend policy

After these basic characteristics, what of the financials did you focus on? And how did you come up with a FV for your stock EGLE?

My thought is to buy 4 or 5 stocks to capture the shipping industry and not just one part (like FRO being oil spot market and getting the wild dividend swings with it)

eyetri2

 

[JPatrick]

Looking at EGLE from the technical sense- - it looks weak. Momentum wise, it has none.  It has gotten a recent upgrade and the earnings are- - -well hard to devine the future from their report.  (for me anyway)  The shipping sector looks only fair with MCX being a stock that is in the same price range and seems to have a better outlook.
EGLE may very well work out, but I'd wait to buy until you sense some life on the upside.  I never buy stocks right before earnings or before they begin their upturn.  Of course, if you have inside information  , go for it.

 

[Brat]

The tanker operation that went to Phillips from ARCO is top notch. I don't know what happened to the marine division when Phillips merged with Conoco.

 

[brewer12345]

I personally own EGLE, but I have looked at the other bulk shippers and would be interested at a price. I like EGLE the best because I think it represents an attractive way to get exposure to bulk shipping in what should be a lower risk manner (low debt, medium term charter with fixed rates, mostly shiny new ships, etc.). I also appreciate the yield, as it forces management to be disciplined in its asset purchases.

You can look at shippers in two ways:

- Arrive at a net asset value for each company and figure out if the premium or discount to NAV is warranted.

- Treat the company as an operating business and figure out what a reasonable DCF valuation is.

Most shipping companies boil down to two inputs that drive pretty much everything. The first is daily charter rates on ships, the second is ship pricing relative to charter rates. Right now, shippers are mostly not adding ships to their fleets because prices are high relative to day rates. If this persists, either day rates will have to rise or ship prices will have to fall. Depending on your view of future supply/demand trends for shipping (ton-mile demand), you might be willing to guess which one will happen.

Aside from EGLE, I pay attention to GSTL (wide variety of older bulker types on a mix of spot and term charters), DSX (almost exclusively Panamax ships on spot charter), and SSW (container ships on very long term charters). All of these guys have their own peculiarities, so pay attention before you just select a yield and pile in.

Shipping is a volatile industry, so you should be prepared for a fair bit of meaningless up and down. However, most of these stocks are priced pretty low, so you get compensated for it.

A good source of info is www.compassmar.com You can also look at the investor presentations on different shippers websites for more info.

 

[Nords]

Looking at EGLE from the technical sense- - it looks weak. Momentum wise, it has none.  It has gotten a recent upgrade and the earnings are- - -well hard to devine the future from their report.  (for me anyway) 

The stock just went public last June, the lockup just expired a couple months ago, most of the shares are still in the hands of the VCs and the volume is only about 100,000 shares a day. How the heck can technical analysis make a clear statement?

You're right, there's no momentum. It's hard to decide when the momentum starts until the share volume at least doubles. And that hasn't happened yet.

I think this stock has to be appraised on its fundamentals, and thank goodness Brewer was around to help me wade through it. The cash flow and the dividend rate are both pretty good indicators of the future. As a guy who's spent more time trying to go to sea than actually going to sea, I'm enamored of the "sweet spot" they're seeking with smaller & newer vessels. I'm impressed by the engineering & operational management but most of all I'm impressed with the cash & the dividend.

The stock price jumps a buck both directions every time an analyst burps. This is better to buy, reinvest the dividends, and give it a year or two.

 

[JPatrick]

The stock just went public last June, the lockup just expired a couple months ago, most of the shares are still in the hands of the VCs and the volume is only about 100,000 shares a day.  How the heck can technical analysis make a clear statement?

You're right, there's no momentum.  It's hard to decide when the momentum starts until the share volume at least doubles.  And that hasn't happened yet.

I think this stock has to be appraised on its fundamentals, and thank goodness Brewer was around to help me wade through it. 

I gave up arguing stocks and the value of TA long ago.  I never have,  nor never will buy a stock without giving "some" consideration to TA.
An important disclosure is the fact that I never buy a stock unless I'm convinced I have a 80% chance of a 5% profit within 60 days.  In other words, immediate gradification as opposed to trying to be the guy who finds the stock that could be a 3 bagger in 3 years.  The only exception to this is my div reinvest stock which is a nice hold due in part to the no commission buys.
The long term stuff I leave to the mutual funds.

 

[brewer12345]

I gave up arguing stocks and the value of TA long ago.  I never have,  nor never will buy a stock without giving "some" consideration to TA.
An important disclosure is the fact that I never buy a stock unless I'm convinced I have a 80% chance of a 5% profit within 60 days.  In other words, immediate gradification as opposed to trying to be the guy who finds the stock that could be a 3 bagger in 3 years.  The only exception to this is my div reinvest stock which is a nice hold due in part to the no commission buys.
The long term stuff I leave to the mutual funds.

Heh, then you should be happy with the shippers, since most of them sport double digit yields.

 

[HFWR]

I'm all for T&A, but gave up individual stocks... :

Owned FRO until last summer...+

 

[JPatrick]

I'm all for T&A, but gave up individual stocks...  :

Owned FRO until last summer...+

Agree, T&A is/are the best.
The dividend chasers ought to love that FRO