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Knightsbridge Shipping Limited Message Board

  • hdhntr148 hdhntr148 Jan 28, 2013 10:50 AM Flag

    owned it for years, more than doubled my position at 5.15!

    not sure why but had lot going for it but up about 40% since i jumped back in. anyone know why?

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    • I have averaged down as well, average cost around $9, glad to see this move up. Since there is no news on their site from 2013 and nothing on the usual boards, it would appear an investor or investors with $$$ simply decided to buy in. Good for us.

      Bear in mind, the 10% dividend you are getting from Knightsbridge is only taxed at 15% and not 35% because they are 'qualified dividends'. This is like getting 13-14% from an ETF like EXG / CYS / AGNC / etc.

      Also note, the value of their ships, plus cash on hand, minus debts, also known as book value, is quite a bit higher than today's value, if you use prices from a few years ago for their ships. However, ships are not selling for those historical prices right now due to the overabundance due to over-production of ships in recent years.

      Good luck.

      Sentiment: Buy

    • Hard to say exactly why. I established this position earlier in 2012 (unfortunately at the wrong time), but have averaged down quite a bit and bought pretty significant portions of my position between $5.02-$6.46. Last time dividend was this low (with exception of the 5 quarters they have not paid one since 1997), was 1997 and we all saw what happened then. Historical average dividend payout is $2.36/sh/yr (a little misleading b/c shares OS have increased). I am not sure it will get back there, but I think $1.00-$1.25 will happen.

      Shipping isn't going away and it seemed that the stock getting below $5 suggested it was. Still tremendous industry and economic headwinds out there, but I like the prospects of the industry and this one.

      Ultimately, goods have to move across the ocean and people carrying them won't do it at a loss - at least not indefinetely - it's not sustainable. If they are doing it at a loss, they'll just stop shipping, and demand will rise. It's not that simple, of course. Some of the more heavily leveraged groups may have had to slow down shipments or just not take the business because they were burning cash and had big debt convenants. VLCCF has the position to continue shipping, even if some vessels were in the red, and potentially benefit down the road as they would rather lose a few bucks in the short term vs. turn their back on the contracts, risk law suits and ruin industry reputation. This will be remembered and the ones with better balance sheets will be able to better name their price to some degree because as the client, you won't have to worry about them going into siege mode and not shipping. That is, you have goods to ship overseas - your market-rate or cheap rate carrier is burning cash each day on the ocean. That carrier is distressed and the banks are hounding for money as EBITDA convenants are broken. Carrier then opts to stop shipping to preserve money. Now, as the client, you need your goods shipped, but if the vessel isn't moving, well, you get mad. So, you turn to the one that will deliver because you know your stuff will be there in 30 days, not 37 or 41. You pay extra for peace of mind, stability and knowing you will get paid days earlier.

      If the industry does stabilize and start to move up, I think these guys will be a big beneficiary since they haven't diluted everyone to nothing and haven't borrowed to the max. With some luck, they can acquire another ship or 2 which will bring the annual payount to the $0.90-$1.30 range. And even if they don't, the idea is to bank on their remaining 4 ships (I am ignoring the 5th which I consider gravy if it ever amounts to anything) with quite a few years left of usefulness delivering $0.70-$1.00 per year payouts.

      Could also just be short covering, January effect or just dumb luck. But the volume on the up days is pretty significant relative to the average daily volume. I haven't seen any news. Not many shares short, but it is possible that those short who were looking for a dividend elimination aren't going to get it and don't feel like paying the $0.70 anymore when they could cover for a nice profit.

      • 1 Reply to archhatter2000
      • I am way under in this stock so the up tick has helped some but not even a real dent. This co. is not the one I bought into. They have a lot fewer ships so the upside is limited by that.

        They have went up a lot lately as you guys have said. Shipping in general has rebounded some but this stock way ahead of the sector for no real reason that I can see.

        I will sell only for a loss write off other wise keep for dividend but I do not think the sector is in recovery. Mr. F who owns FRO, and other shippers once owned a chunck of this co. but bailled out. Maybe he is getting back in to take it over as a way to add 4 ships to his inventory?
        But still a glut in the industry and business has not picked up much even with China comming back. One of those two factors will have to change before this co. can make money and move up but I just hope they can stay above $7. Good luck to all.

4.140.00(0.00%)Mar 13 4:00 PMEDT