Obviously institutional dividend investors are getting out of the shares here in anticipation of a huge dividend cut which is very likely at least medium term.
would use any strength to establish new short positions here - I don't think the company will get bought out given the weakness in its business metrics.
the shares will be killed on any equity conversion regardless how tiny
Yes - they could do this but they can't bank on the favorable scenario going on forever. So wasting all the cash on the balance sheet would be outright dumb here. I continue to expect a roughly 50/50 cash and stock scenario
The company used a combination of cash on hand and new stock in the last two deals and I would expect the same here.
Given market conditions they might be able to roll over the remaining debt but why doing this when they can get rid of it altogether ?
Actually converting debt into equity might be painful for shareholders but economically this is still the right decision here. And given the share price appreciation I would be surprised of the company wouldn't take advantage of it.
The underlying business has been vastly improving during Q4 due to the current oil price contango but actually not ALL of the quarter saw the huge increase in dayrates. Investors might be disappointed by the company's Q4 results. But they should look forward to a great Q1 instead.
The company still has to deal with a $130 mln bond maturity in April - given the greatly improved cash flows I don't view this as a problem anymore but the company has converted parts of the bond into equity at distressed prices last year and might VERY WELL chose to so with the rest. This would outright kill the stock price short term.
The stock has been merely a daytrading vehicle as of late due to some pumping on Smart Money but this masks the true appreciation of the underlying business.
Frontline has done two storage deals so far, securing good revenue and margins over up to 4 quarters. This is a big positive.
Investors should be wary of the company's near term actions with regards to the convertible bond maturity in April. I would expect a huge debt for equity exchange which might lead the stock to plunge 30% and more (shares were down 20% each time they did rather tiny exchanges in 2014). Q4 results might also fall well short of high investor expectations.
Once these issues are put behind and with the oil price contango still in place I would expect the stock to appreciate to recent highs easily but short term I see elevated downside risks. Investors should wait for the company to finally get its house in order and take advantage of an anticipated debt for equity exchange.
Brokers report Frontline has fixed its 318,000-dwt Front Century (built 1998) to Clearlake for 12 months storage. The rate is said to be $42,500 per day for the 17-year-old tanker. TradeWinds understands the deal is not finalised yet. Earlier this week Frontline's 309,000-dwt Front Falcon (built 2002) was fixed by Litasco at $55,000 per day for six months storage. Frontline management chief executive Robert Hvide Macleod confirmed that deal and suggested further contracts were a possibility. “I think storage will be a bullish factor for VLCC’s in 2015. We see 15 [deals] done so far and another 15 to 20 more on subjects,” he said in an email on Thursday.
took a few more days but finally the stock is near my price target. Covering here. Another good call and another giant gain.
finally below $8 - slow progress but things are clearly working out here
Revenues are growing but margins came down even further when normalizing for inventory write-offs. Management promised margins to move up next quarter as well as revenues to come in in-line with expectations but this most likely still won't be enough to reach break-even results. The company's cash needs for working capital inceases continue to be extraordinarily high and this won't stop in 2015 as management pointed out.
Even worse managment did not commit to ongoing sequential revenue growth in 2015 so there won't be any chance for profitability this year.
With poor margins, high cash consumption and no viable path to profitability the shares remain a sell here.
worth $4 mln in additional liabilities EACH year. Stock should reach new lows despite some positive revenue developments. Shorted 30k around $3.20
adding to short position here - would expect this to finally move closer to my $7.50 target today