Based on GNK and BALT SEC filings yesterday, I've tweaked the model and also plugged in spot rates for those vessels chartered accordingly. If a vessel comes off Long Term(LT) charter during Q1, assumed place on spot at midpoint of quarter.
Critical Data points for spot rates:
1) Cape spot rates: $12K/day
2) Pana spot rates: $14K/day
3) Supra spot rates: $14K/day
4) Handy spot rates: $11K/day
Rates above are averages. Model used actual data for Jan/Feb and projects 100% improvement to capes in March (a stretch) and flat to marginal improvements for other classes.
1) DVOE at $5000/day for both GNK and BALT consolidated (GNK projects higher but they’re conservative and always beat projections)
2) No additional debt, interest charges remain the same as Q4
3) No changes to Depreciation, G&A or taxes
4) No changes to any existing LT GNK charters
5) No dilution… this is a big assumption!
6) 4 remaining GNK vessels not delivered during Q1
GNK Revs of $92M
GNK EPS of $0.28 fully diluted ($0.31 basic)
Current consensus estimate is $0.51
BALT Revs of $10M
BALT EPS (loss) of ($0.04).
Current consensus estimate is profit of $0.02
And remember that my model missed to the high side by 4 cents in Q4 so it could be worse than above.
Good to hear from you over here on the GNK Board. The morons over on DRYS have been relentless lately and you have better patience than I in dealing with it....
Couldn't agree more re: the orderbook. What's covered in the media and by analysts is a sham and lot's of folks who don't dig deeper before comitting funds to this industry will be burned badly.
PS - is there any site where you can get reliable info on specific shipping routes that make up the BDI or subcomponents? For instance, C10 withing BCI or S2 within BSI.
There is piecemeal info, but I've not found anything consistent...
Thought if anyone would know it would be you.
Thanks in advance!!
I build my models for near term trading, as I've clearly posted since December. Not daytrading, but looking for option opportunities in front month contracts. Let's be crystal clear here, Q1 is 2/3 over, I have clear indication that the street is missing the numbers. They are catching up but I use these conditions as opportunities.
I trade on that basis, not the stuff I talk about 2-3 years out. The market does not look ahead that far anyway. At most, it may look out 6 months.
However, once the model is built, it's easy to plug in numbers for out years, but again, I don't trade like that because there are too many unknowns. As you say, the further you go out the more variability grows, ie "black swan" events alluded to by Jordan.
All that being said....I will state that this industry has some severe challenges for the next few years due to the macro events I've discussed elsewhere in this thread.
Sorry for the rambling note...
I'm not "poo-poo"ing Killr. I thought I'd made it perfectly clear that I thought he was great. I just think what he's doing is OVERKILL and frankly, undoable.
If I went back to 2008, and looked up ANY analysts' 2010 estimates on ANY stock, no matter how mundane the industry (forget biotechs for example), how accurate do you think those expert analysts with their Wharton MBAs state of the art "models" would have been? I dno't have the stats but I guarantee you...not very accurate if at all. If anybody has old Value Lines laying around, please pull out some projections and see if they came close to panning out. Like the best selling bumper sticker of all time proclaims "S&*t Happens." And the further you go out, the greater the odds that it will.
As for liq. values - yes you could look at posted book values and such, but my point is somebody with Killr's acumen could probably find hidden value (or overstatement) that most wouldn't, or couldn't, bother to find and I think his energy would be better focused there.
As for oil. Every market at every moment in time has bulls and bears. Nothing new there. At $140, I'm sure somebody somewhere said it was a bubble. Prepetually call bubbles, and eventually you'll be proven right. But I don't remember ANYBODY saying it was going to $38 in less than 2 years! In fact, I remember Goldman Sachs (the smartest kids on the street) saying it was going to $200! What happed...S*&t happened.
Excellent analysis, thnx for posting everything.
BTW, TDA's consensus earnings are the same as E-trade's, but other sites don't match, i.e. somebody's not doing their homework:
2011 full year EPS at $1.89
2012 full year EPS at $1.24
From Yahoo analyst estimates:
2011 full year EPS at $1.91
2012 full year EPS at $0.84
" Calculate if GNK was to close shop today and return everything to share and bond holders, how much would everybody get? That's a lot easier, and DOABLE than guessing at BDI's in 2014."
Already been done, see Exhibit 9: Liquidation Value Sensitivity in this excellent analysis of GNK on SA:
Current Resale Value of all ships (mm): $368
Per Share Value: $10.37
That's right, liquidation of all ships yields a stock price LOWER than it's currently trading for. The Total Cash of $264.87M is the only thing floating this boat price-wise, so many folks are ignoring that whopping $1.7B in debt, it's rather silly.
Do I sound negative on GNK's near-mid term future? Heck yeah, anyone with a brain would be...am I a shorting basher? Nope, never shorted a stock in my life, don't even have options enabled in any of my accounts. Am I someone with no vested interest in GNK's pps? Nope - still holding 2/3's of my shares and watching the pps/BDI daily, like a hawk, looking for the best chance to bail once and for all.
Can't believe I let so much profit slip thru my fingers, was swing trading it from $14.50 up to $23.85 back down to $15.25, six in total. In hindsight, I should have sold ALL of my shares at that $23.85 level and moved on with my 97% profit, just getting out with a 15% gain on what I have left would be a delight.
My trades are posted in this thread:
100 short March $13 calls at $0.45 and
200 short March $12 calls(100 at $1. & 100 at $0.55)
Still have em and still up on the trade...
You're generally right about predicting out that far, but I've only gone out 2 years with any detail and the macros of this industry will take long to change (to the positive). If there are any "shocks" to the system, they will be negative, like 2008.
Also the macros in many of the large world economies are supported by debt and easy money. That usually ends badly. China and India are exceptions, but they cannot grow much faster than they currently are or they will overheat inflation.