Cournoyer stresses that apart from governance issues, he is a big fan of Navios Maritime Acquisition. It is why Montpelier owns slightly under 1% of outstanding shares and why he has been invested since 2012.
“We wouldn’t be having this conversation if I didn’t think they were a good company,” he said. “I’ve met with Angeliki [Frangou] and Ted Petrone half a dozen times since we’ve been investors.
“We think they do a lot of things well. She knows her business and her team knows their business extremely well. We’re not trying to micro-manage them or tell them how to do shipping, that’s their area of expertise.
“But in this area, you almost feel that you’re trying to do them a favour. If they could manage to run this company independently, we feel their share price would be 40% higher than it is now.
“Their price was $2.80 per share when we got involved in 2012 and it’s $1.90 now, and in the meantime [hire] rates have doubled. Absolutely, I think independence is the main factor.”
Cournoyer says Montpelier also invests in products tanker owners such as New York-listed Scorpio Tankers and Italy’s d’Amico.
“It’s natural to compare Navios Acquisition to a Scorpio Tankers — and, in many ways, I think Navios is better managed because it doesn’t have all the fee structures charged by Scorpio. Yet Scorpio trades better and I think it is because of the overhang Navios has on this issue,” he said.
Wells Fargo Securities analyst Michael Webber recently rated Navios Maritime Acquisition poorly on the issue of director independence in a wider review of listed companies’ compliance with corporate governance standards.
Only six of 42 outfits scored below Navios Maritime Acquisition’s grade of 56% for independent directors.
However, Navios Maritime Acquisition did do better in the overall governance rating, coming in 28th out of the 42 companies.
A long-standing investor in tanker owner Navios Maritime Acquisition (ticker symbol: NNA) is continuing to press for changes in the New York-listed company’s board of directors despite the withdrawal of a controversial intra-group loan.
Montpelier Asset Management, which is based in London, approached TradeWinds this week in the wake of coverage directed at Navios Maritime Acquisition’s $50m loan to parent Navios Maritime Holdings (ticker symbol: NM) at below-market rates.
Whereas the Navios group elected to cancel the loan in the wake of a shareholder lawsuit, analyst criticism and adverse publicity, Montpelier founder Nicholas Cournoyer made clear in an interview with TradeWinds that the outcome does not quell his concerns over Navios Maritime Acquisition’s board structure.
He believes a lack of truly independent directors presents further danger of improper financial transactions given the relatively weak financial condition of Navios Maritime Holdings and Navios Maritime Acquisition’s status as a “cash cow” for the group.
“We’re glad the loan issue got sorted out, and we credit [fellow shareholder] Metropolitan Capital for highlighting the problem and putting together a good case in their lawsuit,” Cournoyer said.
“However, what we see is that given [Navios Maritime Holdings’] further difficulties in the dry bulk market and with the loss of a contract with Vale in their South American logistics business, we’re afraid the issue can arise again in some form as they look to tap whatever financial resources are within the group — and right now that is essentially [Navios Maritime Acquisition].”
Cournoyer argues the best way to address that problem is to encourage changes in Navios Maritime Acquisition’s board to ensure independence.
“We think the right thing to do is to keep pushing them to adopt an independent board, with the independent directors the only ones voting on related-party transactions,” he said.