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Navios Maritime Partners L.P. Message Board

  • alienation_666 alienation_666 Dec 18, 2012 3:44 PM Flag

    Let's Educate/Expose the Shorts

    Let's expose the short argument on NMM. First, read the Seeking Alpha article titled "Have We Seen the Bottom in the Dry Bulk Industry?" published 12/4/2012. Excellent data and analysis, but somewhat questionable conclusions for NMM.

    Article cites various concerns on the dry bulk shippers:

    1. Seasonal factors will slow iron ore and coal shipments to China.
    2. While the Baltic Dry Bulk Index (BDI) has been rising from September 27th, the Baltic Capesize Index (BCI) has been on a decline since November 21st.

    The primary rebuttal for on these concerns is that NMM has virtually all its vessels on long-term charters, so short term, seasonal declines have little impact on NMM

    3. Over capacity issues, 79% of all Capsize vessels are under 15 years old and the Capsize fleet is expected to expand by 4.3% i n 2013.

    To rebute these concerns, please note that new-building contracting for dry bulk carriers has declined 56% YoY and shipyards have declined 40% YoY in 2012. Only 33% of NMM vessels are Capesize, 57% are Panamax.

    The newer NMM fleet is more energy efficient and saves on costs.

    4. NMM revenues will suffer when there vessels come off long term contracts starting next year.

    Many market Analysts see a significant rebound in the world economy next year, with estimates for 10% to 15% growth in the SP500 being put out for 2013. A stronger worldwide economy will demand more steel/iron ore shipments and shipments of other bulk goods such as coal. China's stock pile of iron ore fell 10% sequentially and 18% YoY in November. JP Morgan estimates there is room for China's iron ore stock pile to grow by 30%.

    So as usual, the shorts have turned a mole hill of concern into a mountain of paranoia and with the aid of manipulative trading techniques and dishonest market makers have stolen value from a good company.

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