Do you now understand how NAT killed themselves with 100% equity/no debt
They have nonstop issued equity to overpay for ships failing to understand that they needed to wait for a bottom in the market rather than keep adding to their fleet. Now you have what amounts to a dozen equity issuances that have all been dilutive and the value of NAT has cratered. I saw thru this nonsense and sold at $35 a long time ago.....
The dynamic would have been totally different if NAT had waited and then chosen a path of responsible debt/equity issuances. Now this is a dead stock walking.... 52 week low, again.
They could have reduced the need for equity issuance if they had adopted a 50% or less dividend payout model. But that would have reduced HH's pay by a third or more.... So now the thing to do is watch the suezmax supply/demand ratio for a time when the new orders coming will merely offset the exiting vessels. That should occur at some point in late 2013. When that occurs, rates for the class should begin to rise and stabilize at a nicely profitable and dividend sustaining level in the mid-$20k per day range. Hope there isn't any stupid purchases along the way, further diluting shareholders along the way.
The dividend to Herb has to be taken into account, but he is following a long-time conservative plan that he believes in. Right or wrong, we only know looking backwards. Day rates have already risen significantly, and I feel the World economy is more likely to recover than deteriorate, further. NAT has debt now, but it is not at a scary level. Ships that produce income are like gold in a world of junk currencies, and NAT will probably do fine. Don't sell unless you need to offset tax gains, and hang it there. Adding to your holdings might be seen as a brilliant move, down the road, but the hardest time to buy is when the blood is running in the street, and few can do it.
I haven't talked myself into it yet, but I always ask the same questions: Can they survive the debt burden for the duration of the recession, and is Management capable? I think the answer to both is Yes. Another thing, understand the Jim Cramer is basically a "trader" who gets nervous holding for any length of time, though I respect his judgement and experience.