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Global Ship Lease, Inc. Message Board

  • aharonlevy aharonlevy Dec 3, 2011 2:08 PM Flag

    Opportunity costs

    I've held GSL for years, increasing and decreasing my position haphazardly (though I thought it was strategically); have broken even or come out slightly ahead over that time. I've been thinking about what spot GSL and other shippers have in a portfolio. There are a few ways to value them, and many nuances to their balance sheets and contingencies, but these are fundamentally commodity businesses. I've always been content to hold onto a core GSL position, supplementing/paring depending on other needs and opps.

    But I just thought, a propos of not too much, geez, why am I holding onto GSL in anticipation of a 2013 dividend when I could buy DCIX (with almost de novo cap/corp structure, conservative and competent Diana management, and excess cash) right now and get a more than 12% dividend, with the possibility of yet more if accretive bottom-cycle purchases are made with cash on the BS?

    There are sufficient macro and micro considerations to make any predictions about 2013 supremely guessy (of course, the same holds true for any other shipper, but with DCIX you're getting the money now, effectively reducing your cost basis), so this suddenly strikes me as smart.

    But maybe buying DCIX is just yield-chasing, and excessively backward-looking, and hence dumb; I made and lost money, after all, in almost equal measure buying and selling GSL. Or maybe it's just dumb, in general, to have a commodity biz occupy a core position in any portfolio, because of increasing correlation among asset classes and the boom-bust nature of the biz. Or maybe that's shortsighted too.

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