I will say that I think the recent drop in price is end of year window dressing and tax loss sales. Tanker rates have been solid and I think that just about every product tanker NNA has in teh water probably got profit sharing in Q4. This is at odds with the share price, and the bonds have been flat.
However, since NM just got a large cash infusion from settling with their counterparty insurer, I am starting to wonder if the mother ship would not consider taking NNA private at these prices. There are, what, maybe 25MM shares in the hands of the public? NM could easily afford to offer $3 a share and I bet they would get to buy out NNA. AF & Co. are very sophisticated when it comes to financial engineering and I imagine they know very well that they could take NNA out if they wished.
Somebody is going to make a lot of money buying this stock at these levels. After all, real profit is made on the purchase. This is BofA @ $3 per share. We just need to be patient. Good things are happening.
Slowly but surely charter rates are starting to rebound. In 3 yrs from now my guess is that we will be back near 20k per daily charter rates. The combination of fewer ships and greater demand will kick in and when it does we will be in for a great run. I don't think many people realize how tough it will be to get new builds going when the demand does pick up. There is practically no financing available except from very select institutions to very select borrowers. NNA would be considered one of those select credit worthy companies.
In regards to a buy out, I think a straight stock deal with STNG exchanging one of their shares for one outstanding share of NNA would work. It would be a cashless transaction and would actually firm up their balance sheet. They don't pay a dividend so they would pocket $8 million annually right there. In addition, STNG management somehow gets better rates for their product tankers so they seem like better operators/managers. Perhaps this is due to the fact that they are far more focused on their business than is AF. Lets face it, while we all love AF she just has far too many operating entities to provide the focus we need.
They will NOT merge with STNG. AF&co. are not the problem, they are a good mgmt team, but they managed - inadvertently IMO - to build an uninvestable stock. It has no float, a name that doesn't reflect that they are in the tanker business, and people think of them as a VLCC owner. While their chief rival, STNG, has positioned themselves as a pure play in the only sector - aside from LNG - worth a fig. NNA has been outclassed in the capital markets, not necessarily in actual shipping by STNG.
But they do need to merge with someone, it's the only way to increase the float in an accretive way at this point. They've blown it for now, they need to re-invent this puppy. Or we just need to wait until 2014 when we've logged a year of $100+mm EBITDA and can forecast a $150MM EBITDA year.
If AF did that, and screwed all the investors who have stuck with her through all the downturn, she will have lost exactly what she does not want to lose- her credibility. Finerman and Co. would not be happy, and AF's name on WS would be #$%$. I don't see it happening.
Yes, their name would be mud. AF patently rejected the idea of buying in the bonds at .75 b/c 1) they want good relationships with bondholders and 2) you don't engage in financial engineering when there are cheap assets to be had in a downturn.
Many of my posts in the last few days have disappeared down the Yahoo wormhole. At this price, the market is saying that NNA's business is essentially worthless. It should be demoralizing to AF&Co. given the work they've put in to build this thing, but c'est la vie. It also happens to be patently ridiculous.
It appears there is some institution(s) that are determined to be rid of shares before yearend and due to the small float they and we both pay a big price in share price decline..
How about a 1 for 1 share buyout after deducting the management fees due NM. This way you would still own NNA under the direct umbrella of NM. NM is in a sense already buying a further interest in NNA by deferring the payment of these fees.
That might be a smart move by management, but lots of people here are in at even higher prices than $3. That would not begin to make them whole. But we could still redeploy our increased capital into another tanker play and do well enough.