I have had FRO for a long time, and sold the last out at about $4. I am not short - so I am not bashing. However, can somebody tell me where the value is in FRO? It seems that Friedricksen left the company with a bunch of old ships, and the value is that FRO has a stake in Frontline 2012. Anybody know what that is worth?
wobbleman I agree with what Mr. Shores has stated I just put it another way. Right now FRO is worth what ever Mr. F wants it to be worth. Simply put the company exist soley because of him and will either continue to struggle alone or will sink under the waves based on what he choses.
What will FRO be worth in 5 years may be a better question. Clearly Mr. F is not going to be building new ships for FRO so the value is to be found in the value of the shipping sector in 5 years and how much money the older fleet will make compared to the newer ships that will be in service. FRO will be at best 25% of what it once was in operational strength if that ans way below that in share price. With today's fleet I think seeing a share price above 10 would be great. (in 5 years) 8 may be more realistic. So do you want to buy now and hope for 300% profit in 5 years or find another place a safer place to put your money?
Wow! Thank you both, Rogere and Mr Shores for intelligent, straightforward answers. Etiquette on some boards has gotten so bad that I half expected assinine, snide flames. It is a breath of fresh air to get thought-out opinions.
I think I will watch FRO for a while, but stay out for now. I am fully invested, anyway.
Your question from your post: "Where is the value in FRO"
In my opinion, the net perception of value in Frontline at this time which relates to the current share price, is the expectation that JF will pull a rabbit out of his hat, which will cause the price to rise, either from a material improvement in profitability or NAV, or from a shift in the market's perception of intangible value, read-potential future profitability.
The net asset value, market value of all assets less debt, is negative at this time.
Frontline2012 is marginally profitable. I expect that it's NAV is probably pretty near zero. The market value of it's newer tankers is below book value. So, though it appears that there is a value to FRO shareholders in the share price and number of shares owned of Frontline2012, I don't consider such value as material.
This is all a big shell game being played by JF. Not saing he is at fault or anything, just that with the current market conditions in the sector, it is very difficult for JF to generate value as he used to.