The purchase appears to be a move that distracts from the fundamental problems with this company and its current share price. Designed as a dividend vehicle, the premise that has held the price up is falling apart. The new business plan is to grow larger in a weak industry. Think about this - growing larger in a business where you do not control price does little good. Further, where are economies of scale? Minimal opportunities to save costs. As the tanker fleet grows industry wide, supply of ships continues to increase while demand appears stagnant. Expect to see additional announcements to attempt to reposition the company, but the fundamentals will remain the same.
Shareholders often put pressure on management to make announcements when the share price appears to be headed south. Don't be fooled.
As this company ages its becoming more and more clear what the stock is in my opinion. Look, four of the ships (the 97 builds) are nearly 50% through thier useful life. Yet the shares that went IPO to pay for them will always exist, without a buyback that the dividend will always prevent.
every year this companies fleet moves 4% closer to requiring replacement (25 year ship life span) but the share count always moves higher every year.
Only a truly massive rate bounce can save it now in the long haul.
You couldn't be more correct. This whole spiel of how this abysmal market will help NAT "take advantage of weaker players" is a total farce. Anyone who took econ 101 can tell you that this is irrelevant in a perfectly competitive market. Such an advantage would only be present if weakness in the industry resulted in reduced supply of shipping capacity; capacity is not decreasing, on the contrary, it is ever increasing. The only question is at what rate will the increase in capacity exceed any increase in demand. The IEA says that oil demand won't return to pre-recession levels until 2012. That means that rates will almost certainly continue to suck. NAT should be in no rush to acquire more ships as the opportunity is not going to disappear overnight.
People with the delusion that being the biggest player in a doomed industry only need to look at AP Moeller as an example to debunk their flawed reasoning.
Today's run-up is a great opportunity to buy puts for cheap.