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Redwood Trust, Inc. Message Board

OptsyEagle 2 posts  |  Last Activity: Jun 8, 2016 8:40 PM Member since: Mar 20, 1999
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  • Reply to

    From the SB Conference Call

    by optsyeagle Jun 7, 2016 8:37 AM
    optsyeagle optsyeagle Jun 8, 2016 8:40 PM Flag

    Your assuming the ordering stops this year. It pretty much flattened out in 2014. In any event, someone will survive and it is usually the lowest cost operator with the better liquidity. That's Safe Bulkers. All I am saying is $1.20 to probably a new record high (something north of $18 a share) is a pretty good return in 4 years or even 6 if it takes that long. That price may sound high but remember, with commodity businesses, the size of the boom is usually in direct relation to the size of the bust. We have had a record bust in shipping. You can be sure the boom will be as well. When this pendulum swings, it will swing for the fences.

  • I found this statement made by Loukas Barmparis, President, Safe Bulkers. It is only pertinent to a longer term investor. It is basically my investment strategy with SB. Buy it now when the industry is in the dumps. It's lower operating costs then it's competitors, low fleet age and liquidity position will make it a survivor. Wait until around 2018 to 2020 for the industry rebound that this scenario below will bring. It always does. The best cure for low prices (daily charter rates in shipping) are low prices. They squeeze supply and eventually demand overwhelms it.
    -------------------------------------------------

    Loukas Barmparis (Q1-2016 conference call)

    " Because banks are shrinking, the number of banks are shrinking, the liquidity of the owners is shrinking because there was a lot of equity lost and disappeared, and everybody is trying to repair balance sheets and to fix their wounds, there is not going to be any ordering of drybulk vessels in 2017 and 2018

    So if we have this, and we assume that the market starts recovering meaningfully in 2018, we will have another two years in front of us without any newbuildings being delivered. You don't need the demand to do a 7% or a 5% when the fleet and the demand is balanced. You need just a 2% or a 3% in any given year above the time of the year or the market to go from $6,000 to $12,000 a day.

    Exactly the same story happened in the tankers. The tanker improved when there was a little bit increase of demand. But after they had four years of no ordering and four years of no speculative ordering in the market, so this would happen in the drybulk market. And I think that the supply is getting very favorable now for shipowners."

RWT
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