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Excel Maritime Carriers, Ltd. Message Board

  • play_tow play_tow Jun 14, 2006 2:14 PM Flag

    WallStreet Journal Comments on DryBulk

    From today's Wallstreet Journal Online edition...note the reference to GENCO being in position, being ablewith cash, and having a history of being willing, to grow by acquiring a smaller player.....maybe EXM? Just the notion of such a posibility would do wonders for EXM's flailing stock price.

    ___________
    Genco Is Poised
    To Add to Fleet
    Of Freighter Ships

    By ROB CURRAN
    June 14, 2006

    NEW YORK -- When Genco Shipping & Trading Ltd. made its stock-market debut last summer, along with a slew of other cargo shippers, shipping rates had hit historical highs and were headed back down.

    However, today's lower daily rental rates -- the rates customers pay to ship their freight -- may help Genco achieve a goal stated in its prospectus: building its fleet.

    Daily rental rates for dry-goods transporters dwindled when an overabundance of ships entered the market looking to cash in on the high prices. This has made for rough seas for Genco's stock and shares of competitors Quintana Maritime Ltd., TBS International Ltd., Eagle Bulk Shipping Inc. and DryShips Inc., which all went public last year. Genco's stock was down 0.4% at $16.27 in afternoon trading yesterday on the Nasdaq Stock Market, below its $21 price at its initial public offering.

    But the lower rates might encourage a smaller shipper -- and there are many in the fragmented industry -- to sell its fleet to Genco at a discount. Acquiring more ships now at lower prices could be a boon to Genco in a couple of years when, as analysts expect, daily rental rates rise again.

    Analysts also expect the supply of ships that Genco might buy will shrink as older ships are retired.

    Genco, based in New York, was founded in 2004 by shipping-industry veteran Peter Georgiopoulos, with backing from Oaktree Capital Management LLC, a Los Angeles hedge fund and private-equity firm. It ships grain, coal, iron ore, fertilizer and other "dry bulks."

    Mr. Georgiopoulos, 45 years old, who is chairman of Genco, is also the founder and chief executive of oil-tanker company General Maritime Corp. He founded Genco after Genmar's board declined to venture into dry bulk.

    At Genmar, he built his fleet by keeping debt low and hoarding cash until ship prices fell. He plans to steer Genco along the same course.

    Dahlman Rose & Co. analyst Omar Nokta said Genco has "a lot of buying power at the bottom of the market" while rival DryShips is "stuck with a huge debt balance from ships bought at the top of the market." (Mr. Nokta doesn't own any shares; Dahlman Rose has done investment banking for Genco.)

    Genco has a debt-to-equity ratio of 0.38 to 1, compared with DryShips' ratio of 1.47 to 1.

    Oaktree principal Stephen Kaplan expects a significant, multiple-ship acquisition in the next couple of years, based on Mr. Georgiopoulos's track record.

    Write to Rob Curran at robert.curran@dowjones.com

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    • It is precisely because this stock dropped too much, that is why it is an extremely good buy now.

      Like a pendulum, in 2004 EXM swung from $8 to $60 in 38 trading days. That was overdone in the bullish side, but now it is overdone in the bearish side. It was too bullish in 2004, but now it is too bearish.

      When it is too bullish, it is time to sell.
      When it is too bearish, it is time to buy.

      Buy low, sell high is how you make money, not the other way around.

    • Nice to see yer still able to dish out some shit. As much as you've lost on this investment, I thought you'd be hiding in shame. Good to see such spirit, even in someone who won't listen and lost their ass.

    • This is still a crapshoot. All you need is a major geopolitical event, a major disaster or a company specific problem. Suppose one of EXMs ships loaded with ammonium nitrate or some other neat stuff, gets tee boned in Bristol Channel or
      the Houston Ship Canal, sinks and spills the cargo. On the other hand, the fundamentals for EXM favor the upside, provided there is no major negative event. Good luck to all.

      db

    • Agreed on that too.

      In the short-term, the market is not efficient, so bargain does exit for short-term. But in the long-term, the wrong valuation will be corrected.

      Just like last year, I was able to buy ZEUS and MUSA under book value, but a company saw the same good deal and bought out MUSA, not long after I bought it. The valuation was corrected instantly by the buyout.

      ZEUS took months to get back above its book value, but it was still corrected back up to its fair value eventually. And no one is able to buy ZEUS under book value anymore.

      That is why I am confident on EXM. No profitable company stays below book value forever. NONE. EXM will at least double its stock price from here.

    • Remember what I said was "in the long run" that is why those of us who do our research make money. If the market was just a "crap shoot" only the house would make money.

    • <<The markets aren't all that efficient.>>

      Agreed on that.

      If the market is always efficient, I would have no bargain stock to buy.

    • <<Wall Street is choosing to evaluate EXM on its profit & loss, not the balance sheet.>>

      Agreed totally. All headline news only tells investors about revenues and profits, and most investors do not even know how to read financial reports like balance sheet. But that is how I make money usually. If everyone knows how to read balance sheet and price stocks properly, I would have no bargains like this to buy.

      How else would I be able to pay $0.53 for $1 worth?

      If I were to tell someone, "I will give you $0.53 for each dollar of your net worth, and you also have to give me all your future incomes." If he does not beat me up, he would probably at least tell me, "I am not that dumb. Get out of here."

      But with value stocks like EXM, I am exactly paying $0.53 for each $1, and all its future earnings are free for me to keep. And the sellers were dumb enough to sell them to me.

      That is how I make money. That is how many bigger value investors make money. The concept is not new. It has been used successfully for decades if not centuries.

      And I would not be surprised that at the Marine investor conference, some big investors or funds scoop up this great bargain.

      It does not need too much money to move this bargain stock substantially up.

    • Spence and others still came to the conclusion that in the long run, the stock market is very efficient. Since I am not in a hurry as to EXM I will rely on an efficient market to maximize what I have invested in EXM.

    • <<If EXM had financed their fleet expansion with debt instead of equity, net shareholder equity would be half what it is today, but their leverage would be far higher.>>

      Agreed totally, and that is why I said their secondary decision was a good business decision.

      <<Asset base is not a reflection of managment's ability, fleet size and utilization versus operating expenses is better, but not perfect.>>

      What I used was NET asset numbers, not just assets. NET asset increases or decreases reflect whether they are increasing value for shareholders or not. If you only looking at operating expenses, etc. to judge management ability, you would be biased toward owners with newer ships, but that really does not say anything about management ability. A fair comparison would be for similar fleet ages, how two managements were able to manage. Let me put it this way, all ships will get old, those that manage newer ships now, will they still be as efficient as Excel when ships get older?

    • Please forgive me my rosy scenario. If I were using Yahoo's EPS history and plotted a straight line projection, EXM's guestimated return on assets would be approaching zero.

      At least I do my own analysis and present the macro and micro assumptions behind the forecasts.

    • View More Messages
 
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