Follow Shipping Stocks?

[brewer12345]

Quote:

Originally Posted by vvsonikvv How does NMM's IPO affect NM? Are they splitting up their "work" between the two companies? The IPO expects to have prices between $19- $21. I wonder what happens to prices of NM shares.

I view NMM as very beneficial to NM, assuming they sell the deal at the expected price and NMM trades well. What they are doing is setting up an MLP structure. NMM will be the LP interest in an entity that owns Panamax and Capesize ships on 3+ year charters. NM will be the GP and own a chunk of the LP interest as well.

Effectively, this allows NM to raise cheap capital to expand the fleet while still retaining much of the upside taht the fleet generates. It also means that if they need to raise equity capital they can do so without diluting NM holders.

I would expect that NM will trade up if the deal goes well, although it is hard to tell how much or over what time period.

[brewer12345]

EGLE is starting to look quite cheap as it cruises towards 25-26. I'd love to buy some options, but the premia are still quite high. Might even buy some of the equity of it gets down to 25.

DSX is getting cheap again, too. If these idiots hammer it down to 25-26, it will be a huge bargain.

NM appears to be trading well below liquidation value.

[Art G]

I own GNK, VLCCF, and NAT. Only GNK has held up thus far. I sure don't like the charts on the other two.

[brewer12345]

Can't help you on the tankers because I would never forgive myself if I owned a ship that spilt its guts into the ocean. The bulkers (including GNK) have been sold down totally irrationally. I am just waiting for option premia to calm down a bit before buying a big wad of calls on DSX and EGLE. I covered my short calls on NM today and I am looking to cover my DSX calls as well.

[twaddle]

Brew, why not sell naked puts when the premia are high? I'm sure you wouldn't mind owning some shares at a lower price.

[brewer12345]

Tempting and I have occasionally done so in the past. But I am already balls deep in this sector, so I am trying to gradually work down my positions, not increase them. So I sold covered calls when the stocks popped up and options premia were juicy, and I have now bought them back for a fraction of what I sold them for because I think most of the downside is over. When they pop again, I will sell more covered calls.

[Brat]

Notice that DSX has lost its momentum?

It is getting closer to the level that I last sold it. Any reason why I shouldn't once the price suits me?

[brewer12345]

I personally find the sell-off baffling. Day rates are a hair away from breaking a new record high, and unless you think we are entering a eriod of global recession that will slake China and India's thirst for raw materials (includeing coal for electricity generation), it is hard to imagine that rates will crash. Having said that, I note that the day rates implied by the shipping derivative market for the next two years is falling. But t aht is such an illiquid market in its infancy tat it is hard to really draw any conclusions from it. Charterers appear to be more than willing to sign time charters at rates far above what the derivatives suggest (they need the actual ships, I presume).

DSX just signed a 1 year deal for a ship that more than triples the day rate the ship was earning. I think they have 4 or 5 more ships re-setting their charters in teh next few months. 95% of the increase falls to the bottom line. SO I think DSX shares are quite attractive in the 20s.

Also check out EGLE and NM. Both have most of their fleet locked in for the next few years and have even bought insurance against their charterers defaulting.

[Brat]

I think DSX became a trader's investment. They weren't in for the long haul and don't study the industry fundamentals.

Cramer once advised folks to sell when everyone loved the stock, then he loved DSX.

I am waiting until the traders turn and run. The are just backing out right now.

[brewer12345]

Could be. I think they are close to done. I think liquidation value of DSX is north of $25, which will help offer a floor.

NM and (to a lesser extent) EGLE seem to have avoided the attention of the traders. They are also more conservatively run.

[Brat]

Found on line:

11/2

CEO Interview: Simeon Palios, Diana Shipping (DSX)
Simeon Palios admitted the dry bulk market is a "very dangerous" place to predict future rates, but added the short-term picture looks good for the company given cargo movements and the demand for ships. "I like the stock, but am not hitting the bull button," Cramer said. "That was not the reassurance I was looking for."

Related: Until Friday, Cramer was bullish on Diana.

$25 is my re-entry point too.

[brewer12345]

$25 would be an attractive, conservative place to jump in. I watched the Cramer interview and found it tragically funny. Cramer is a rah-rah idiot and wanted that from 70+ YO Palios. Instead, he got a careful, measured answer from someone who has been in t his cyclical business since before Cramer was born.

[twaddle]

The shipping stocks with high exposure to spot prices have become a proxy for the Chinese stock market. China is down today, so go the shippers.

[brewer12345]

Fair enough, but even the guys with charters locked in for years are getting hit. And day rates are up strongly despite the Chinese market.

That may be the way the idiot traders play it, but its a long way away from the fundamentals.

[Running_Man]

Basically isn't the drop in these stocks indicating there is going to be an economic contraction? Or at least a good size fear of one? That is what I am taking out of this sudden drop, fear of economic contraction in the forward years.

[brewer12345]

Very hard to tell because lots of short term traders and Cramer-followers have flocked to the sector. So inferring much from the price action is a lot tougher than it otherwise would be. Which is precisely why I am fixated on the fundamentals. If the coal doesn't get mined and shipped, the lights go out in China, India, Korea, Japan, etc. And you tell me if you think China will let their economy slide into recession. Given the nagging social problems that would quickly eclipse everything else, I think this is highly unlikely.

[brewer12345]

Quote:

Originally Posted by Brat Found on line: 11/2 CEO Interview: Simeon Palios, Diana Shipping (DSX) Simeon Palios admitted the dry bulk market is a "very dangerous" place to predict future rates, but added the short-term picture looks good for the company given cargo movements and the demand for ships. "I like the stock, but am not hitting the bull button," Cramer said. "That was not the reassurance I was looking for." Related: Until Friday, Cramer was bullish on Diana. $25 is my re-entry point too.

Dunno if you are still interested, but some of these stocks are getting to pretty compelling valuations. I think NM is quite attractive under 15, EGLE is a real bargain in the mid 20s, and DSX might be worth a gander if it gets knocked back down to 28 again. Heck, if it drops enough (60s), I might even find some room to buy a small position in much-maligned DRYS.

The most conservative plays would be EGLE and NM.

[unclemick]

Hmmm - greed and lust 'may' impell adding to EGLE next month, price willing.

Sort of the Norwegian widow's early Christmas present to herself.

heh heh heh - oh and maybe a tad more BAC for triming.

[Dawg52]

EGLE does look attractive. Keeping my eye on it. The only stock I had up today was MO. Nothing exciting about it but hanging in there. My overall portfolio down 4% from the it's high of just 2 weeks ago. Hope Santa fattens up my portfolio stocking.

[brewer12345]

UM, I think STON is in bargain territory again also, if you want to scratch that itch.