Follow Shipping Stocks?

[dm]

I went ahead and added alittle NM and DSX. I wonder if the dividends will hold up.

 

[haha]

Thanks for the well informed discussion Brewer!

ha

 

[brewer12345]

Thanks for the well informed discussion Brewer!

ha

Any time. FWIW, the estimates I have seen of tonnage out there that is in the usual age range for scrapping is on the order of 25% of the fleet, and growing every year.

 

[BUM]

Planning on adding more NM tomorrow, gulp.
New Money
Not Me
Never Mind

 

[Running_Man]

BDI index fell another 16 percent today. Wall Street Journal article from Monday claims 38 percent of voyages are returning empty with no cargo available for pickup even at these rates.

 

[jimnjana]

Anyone follow esea? Picked some up recently and considering adding. Trading close to bv.

Jim

 

[dm]

Well I keep buying NM and I'm getting bloodied. I just bought more at $3.30. I'm done and just hope that long term this thing turns around. Hopefully they can stay afloat and maintain the dividend.

 

[al_bundy]

anyone want to take bets it will bottom around $2.00 plus or minus $.30?

 

[brewer12345]

Well I keep buying NM and I'm getting bloodied. I just bought more at $3.30. I'm done and just hope that long term this thing turns around. Hopefully they can stay afloat and maintain the dividend.

They have essentially all of their capacity chartered out at fixed rates this year and 75% next year and north of 50% for 2010, so I don't believe they have much in the way of real issues in the immediate future. Day rates have collapsed in the sector because the flow of goods has all but halted (banks aren't issuing the necessary letters of credit). But does everyone really believe that there will never be a need for grain, steel, etc. that all has to be shipped by sea? When the credit system starts working again the flow of goods will resume and demand for ships will again rise. I think the sell-off in this name is absurdly overdone.

This company has also always hedged and traded in the shipping derivatives market, generally quite successfully. I am quite eager to see how they did in the third quarter because if they called it right they had the opportunity to make a great deal of money.

 

[Running_Man]

My concern is the BDI which has declined an amazing another 30 percent since my last post in just 5 days is saying what economic activity is actually occurring, that is that economic activity is rapidly collapsing.

If that occurs the contracts will prove to be unenforceable and worthless. This seems to be what the market is saying will happen based on pricing. After an eighty percent down move I am not going to argue with the market. I would wait for the BDI to get back over 5000 as a sign this market is recovering before buying any of these stocks. I was awfully close to buying NM at 7, only the falling BDI kept me from getting in.

 

[CCdaCE]

Even NPR introduced the meaning of the BDI on their Marketplace show. Said that companies are "telling their captains to wait at anchor rather than lose money". But, I don't know why they'd be losing money if they have a contract. Must just be talking about spot rates or whatever.

Not that they are the know-it-alls, but it just goes to show how quickly things have changed. My question is the timing of a rebound, which brewer has addressed.

-CC

 

[brewer12345]

Even NPR introduced the meaning of the BDI on their Marketplace show. Said that companies are "telling their captains to wait at anchor rather than lose money". But, I don't know why they'd be losing money if they have a contract. Must just be talking about spot rates or whatever.

Relates to spot rates. A prominent Israeli owner publicly stated that they will idle their spot capesize fleet and they are a significant player in the spot market (upwards of 5% of the total fleet on spot).

 

[Art G]

Scares me, but I actually listened to brewster and bought some NM yesterday. Not very much though.

 

[dm]

The shipping stocks are still getting battered. I sure am tired of these big drops. NM is down to $3.00 now, maybe it will hit $2.00. I'm done for now. I'm not adding any new money and I'm not selling. Its seams alittle late to sell now anyway.

 

[Dawg52]

The shipping stocks are still getting battered. I sure am tired of these big drops. NM is down to $3.00 now, maybe it will hit $2.00. I'm done for now. I'm not adding any new money and I'm not selling. Its seams alittle late to sell now anyway.

I feel your pain. I own it too. I might as well hold on and watch it go to zero.

 

[unclemick]

I'm thinking of adding to EGLE - I haven't bought any since ?

As a short term trade to keep the hormones happy - if it doesn't do well in 7-10 years I'll pull the trigger and sell.

Saint's aren't doing that well so I may play with a few stocks. Dang foreigners bought BUD before I could get off the couch.



heh heh heh - meanwhile back at the ranch - those Vanguard computers are rebalancing my Target Retirement.

 

[Running_Man]

Interesting item on NM they are planning on paying out $.78 per share for holders of 10/31/2008 38 cents for the third quarter holders of record 10/31/08 and .40 for holders of record at 12/31/08. Which means at the present price of 2.80 you would be getting the stock for $2.02. Wow, I think I'll listen to the archived conference call.

 

[Lakedog]

I believe that div increase is for NMM which NM owns something over 50% of -- NM has not indicated their next div but even if it holds the current level would be paying around 12-13%.

 

[Running_Man]

I believe that div increase is for NMM which NM owns something over 50% of -- NM has not indicated their next div but even if it holds the current level would be paying around 12-13%.

Well that certainly makes more sense, I need to listen to the call. I thought that was extraordinarily odd, I should read the Yahoo mail more closely! Thanks for setting me straight

 

[Brat]

As I sailed from Bainbridge to Seattle there were a bunch of dry ships at anchor (looked like grain carriers), more than I ever recalled seeing before. The harvest should soon be arriving at the terminal but usually these ships don't waste payroll anchored out.

 

[haha]

I made my first investment in this sector a few weeks ago-NM. I'm down 25% from entry, kaboom almost overnight. I really know nothing about this industry, and in reading over several blogs and boards that cover it I think there are quite a few details that will take a plodder like me about a year to figure out.

Right now all I want to do is to satidfy myself that they are not going to find themselves violating debt covenants or going broke. That is all it will take for investments at recent prices to be quite successful over time. Commodity industries always boom and bust. As long as you have a survivor, best time to invest is in a profound slump.

In speculative industry what I want is a very strong company. Then buy an amount that might turn into $100,000 or so in a boom, and will p*ss me off but not kill me if it fails.

My time constraints are such that I could handle quite a few investments of this general size, so success could be very meaningful.

Ha

 

[Gardnr]

I made my first investment in this sector a few weeks ago-NM. I'm down 25% from entry, kaboom almost overnight. I really know nothing about this industry, and in reading over several blogs and boards that cover it I think there are quite a few details that will take a plodder like me about a year to figure out.

Right now all I want to do is to satidfy myself that they are not going to find themselves violating debt covenants or going broke. That is all it will take for investments at recent prices to be quite successful over time. Commodity industries always boom and bust. As long as you have a survivor, best time to invest is in a profound slump.

In speculative industry what I want is a very strong company. Then buy an amount that might turn into $100,000 or so in a boom, and will p*ss me off but not kill me if it fails.

My time constraints are such that I could handle quite a few investments of this general size, so success could be very meaningful.

Ha

Ditto, pretty much. I'm down about 17% on my position just recently acquired. I'm still educating myself but I also agree that there are many stocks around that have been summarily shot without regard for fundamentals and/or are just deeply discounted due to cyclical economic factors; like NM. I can afford to take a position at these beaten down prices and hold for the long term and reap the reward on the steep rise when the global economy picks up again. I don't have to time it that closely to make a good return by my standards.

Hope we're right!

 

[Dawg52]

I own NM too, but I am down a WHOLE lot more than you guys. I'm just hoping to break even.

 

[Art G]

I own NM now at an average of around $3.30 or so. Hard to figure this one. It seems to go up when the other shipping companies are down, and vis-a-versa. What's up with that?

 

[haha]

I hae a small position in NM, taken without a whole lot of understanding. I still am deficient.

Balance Sheet: NAVIOS MARITIME HLDGS INC - NM - CNBC.com

Have a look at the blance sheet over the years 2005-2007. Stockholder equity increased almost 3 times over, while shares outstanding increased less, only 2.41 times. So equity per share increased, a good thing.

But even so, there is a hazard in this business model, at least as I see it. NM goes to the equity markets to fund its growth. They of course also borrow, but if the number of ships is increasing and revenues growing, they would quickly get overleveraged without the equity infusions.

No doubt at times like today when the cost of equity capital is very high for NM they can get along by throttling back growth. To what extent I don't know, because I don't know the conditions of their ship orders.

And of course, sooner or later they will have to refinance existing ships, just like a REIT will have to refinance a certain portion of mortgages.

You make the most money when you have liquidity when it has dried up for others. That situation is unlikely to happen here, even if NM is better positioned than some others- esp perhaps than the MLPs whose business model requires greater % payouts.

ha