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Genco Shipping & Trading Ltd. Message Board

  • pmony5 pmony5 Aug 18, 2010 5:46 PM Flag

    Anybody got thoughts on my DD please help

    Some Quickie DD on GNK BTW at 52 week LOWS... no position

    A Marshall Island shell corp.

    1.8 Billion in Debt & EPS projected to drop 30% Next Year !!

    40% share dilution in last 5 months

    1/2 their charters come off contract in 2010 the rest in 2011 NO LONG term deals.

    Cargill a major customer is shopping around for new shipper better hope you don't lose them.

    2 Financial Institutions hold all their cash & NOT INSURED !!!

    NO ASSETS owned they are a holding co. and own nothing dependent on subs to pay them.

    Huge Glut of New ships hitting Market & used ships worthless making Book Value drop causing GNK to be out of COMPLIANCE on DEBT will need waivers

    Oil & Gas rising so costs going through the roof...

    Dry Shipping a very cyclical sector ALWAYS up & down cycles & with global economies slipping a little ???????????

    Better hope the Baltic Dry Index doesn't fall off a cliff with economy ??? Those shippers profits dry up pretty quickly especially without long term contracts in place ....

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    • Good post. It's time that everyone realizes that the purchase of the fleet is accretive and that the results will show up immediately.

      I too was concerned at first, but GNK management is showing that they know what they're doing.

    • Agree with your thoughts about Fredrickson, I also own both SDRL and SFL (just added some more SDRL on a dip last week) along with GNK and DSX. I think he's the best friend to his stockholders amongst all of the shippers, while everyone else chopped or eliminated divs he kept them and even increased them (SFL just upped to 35 cents from 30).

      As far as the recent "dilutive" GNK transaction, it's not dilutive if the proceeds are used for acretive transactions, and so far every new ship they've gotten has come with a charter attached to it already, so the purchases add to earnings right away. True dilution occurs when the money raised is used for the dreaded "general corporate activities", short hand for "we can't cover our overhead with our earnings and had to raise cash".

      I wasn't happy when I first heard about it either, but it's turning out ok so far. GL.

    • semper-your a little younger than i thought then. i had a terrible 'home life', bribed my mother to sign relase papers b-4 i was eighteen for a bottle of vodka. at the time i was one angry sob. quite mellow/wiser now (usually, lol).GL

    • Nah. Just grumpy.

      I was 18 the last year they pulled draft numbers for 'Nam. Don't believe anyone from my year saw compulsory military service.

      And... no way was I going to enlist for that all expense paid visit to SE Asian jungles.

      So.. there were no Sgts bellowing "devil dog" at me.

    • semper- btw, are you a 'devil dog' or just always grumpy? lol.
      always wondered ... as some 'lead the way'. regards

    • semper- glad you are still involved, appreciate your history and slant on things, helps my brain bring things to the front again, things i forget, but linger back there, (somewhere in space). GL

    • ww- fwiw, i think 'tall' knows and tracks gnk as well as anybody.
      'semper' quite knowledgable as well, doesn't show up too often.
      'slim' very knowledgable as well. think he got exhausted with short battle and 'malupation', as well as other 'old timers' GL

    • Of course, eps 2.50--that is an estimate forwarded by analysts. Analysts are notoriously reactive. They made those predictions based on the numbers returned from 2009. They were busy estimating while completely ignoring present market conditions or a realistic future outlook. If you look at historical eps, you would see that 2.50 is way out of whack. I am inclined to accept the historical norms for this company rather than some outlandish predictions based entirely on the crappy numbers from a recession year.

      • 1 Reply to indica85
      • I don’t know why some people here have to bash others for simply expressing a tentative thought about what they might have heard. It’s rude and does not make the basher appear masterfull. You never see the more intelligent posters like Thetallula and Indica85 respond with this sort of bile. The bashers are small sorts, incapable of elevating themselves with intelligent and perceptive comments. So they have to try to drag everyone else down to their own level.

        Having said that, I think the Thetallula may have stolen some of my points, but I have included them below anyway:>)

        A Marshall Island shell corp.
        NO ASSETS owned they are a holding co. and own nothing dependent on subs to pay them.

        Comment: Actually, no. You don’t mean that the shareholders own shares in a company that owns no assets? It’s not uncommon for companies to shield their assets again events like the Exxon Valdez oil spill operating out of a shell corporation. I think that’s what you refer to.
        ============================================================
        Huge Glut of New ships hitting Market & used ships worthless making Book Value drop

        Comment: The average age of the world fleet is around 15 years old. This means that over the next ten years, 50% of the world fleet is going to have to be replaced. That will take a lot of production. Also, guess which ships get chartered first when there is an oversupply. It’s not the old ones.
        ===========================================================
        Oil & Gas rising so costs going through the roof...
        Comment: Fuel is paid for by those who charter these ships. Not GNK
        ===========================================================
        Dry Shipping a very cyclical sector ALWAYS up & down cycles & with global economies slipping a little ???????????

        Comment: This is what makes shipping stocks so incredibly profitably…if you can buy them at a bottom. And this is one hell of a bottom.

        1.8 Billion in Debt…

        Comment: Debt is leverage and that’s what makes a company like GNK take a big jump if the economy steadies and shipping rates go higher. If you want to sleep good at night, sell GNK and buy some DSX.

        …& EPS projected to drop 30% Next Year !!

        Comment: Looks like the analysts and DSX seem to think that the economy has a bit further to decline and ships are going to be getting cheaper yet. (DSX has yet to pull the trigger on loading up with a significant amount of shipping. Are they right to be cautious. Dunno.

        40% share dilution in last 5 months

        Comment: All in a good cause…buying ships that increase the earnings per share.
        ===========================================================

        1/2 their charters come off contract in 2010 the rest in 2011 NO LONG term deals.
        Comment: When these ships come off charter, GNK can find charters if that is what they want to do. Their plan may be to try to keep a certain fraction of the on 1-2 years charter at all times. That keeps everyone less panicky. But GNK seems not interested in the ten year charters that NM is taking on. I like GNK’s strategy better.

        Cargill a major customer is shopping around for new shipper better hope you don't lose them.

        Comment: Ever notice how these stories come out exactly when the market gets a bit nervous. Part of me thinks that certain parties try to drive stock prices one way or the other in order to induce panic in the market sheep. Panic to sell, or panic to buy that allows some operators a bit of a profit.

    • I will add my 2 cents here too...

      It appears your dd aptitude has skimmed a selection of headlines without doing any further looking into the matter.

      40% share dilution--uh...40% increase in dwt, 10% share dilution (not including pref shares).

      1.8B in debt--I compute 1.35b in long term debt. The most recent 250m was borrowed at a rate of 5%.

      Half the ships come off charter in 2010--gnk chartered ten ships in march (out of 21 coming off charter in 2010) for 11-15 month charters. Bdi was about 3000 at the time.

      Cargill--business is business.

      Glut of ships on the market--at the beginning of 2010, the difference between planned scrappings and newbuildings was 593 ships. After contract renegotiations with shipbuilders, the most recent report I have seen on the matter (July) showed a difference of 184.

      Waivers--waivers? Due to covenant breach, haven't they had waivers in place since early 2009?

      Bdi falls off a cliff--it just finished doing that. Have you been watching the last few months? If you were watching, you would have seen the major shippers refuse to charter at those low rates, causing supply to fall, in turn causing bdi to stablize and rise. No shipper in it's right mind is going to sign a charter for a capesize vessel for 12k/day...which brings up another point. The recent cratering of the bdi was almost entirely due to the capesize index. Panamax/supramax prices held up relatively well. For a few days there, it was cheaper to charter a capesize than a supramax (by about 6k/day)!!! Talk about a market dislocation. Incidentally, I do believe gnk's capesize charters are all long term.

      GL with whichever choice you decide to make :-)

      • 1 Reply to indica85
      • These "born yesterday" idiots are just blowing smoke up their own a$$es. Everyone knows its all BS. Losing Cargill. Yeah right. Like these pukes would know even if were true. Like it would even matter if it were true. A ship is a ship. It's a commodity. If one charterer doesn't take it, another one will. It would mean little if nothing else if they chartered to someone else.

        Of course GNK doen't own any ships. The douchebags would have you believe 3M doesn't make tape either. Then they answer themselves with new personas to give the illusion someone actually gives a chit about what the have to say.

        You know what they are really saying? THEY'RE BUYING! That's what.

        Unbelievable.

    • I'll try to address some of your points.

      As a marshall islands corp they pay no taxes.

      A shell corp, it would be foolish to not incorporate each ship as its own company, the limited liability is a plus in that instance. All of these companies are 100% owned by GNK (with the exception of balt).

      The dilution came with expansion of the fleet by almost 40%. I was not a fan of the dilution but it was necessary with the size of the acquisition.


      GNK management has maintained a relatively short timeframe for charters. Whether you think rates will go up or down is the key.

      Cargill and the rest of the customers are shopping for a commodity good, I would expect them to look for the lowest cost.

      Oil and gas costs do not impact drybulkers at all since the charterer pays those bills.

      Investing in any drybulker, especially those with shorter term contracts, is a bet on the chinese economy in general and its desire for iron ore and coal.

      Finally, the 2011 estimates have continued to rise for the last 90 days, it will be interesting to see where they end up, but 2.50 per share appears pretty low.

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GNK
1.700.00(0.00%)Apr 21 4:07 PMEDT

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