Hi Mr. Dakine,
You are correct, of course.
I was merely refuting burghboy's assertion that it was "not possible" that anyone made money buying and selling FRO in the past 6 months.
It was a continuation of the POV that the way to make money on FRO over the past couple of years was to do exactly that... time one's buys and sells, NOT buy-to-hold.
Well, I found a few 2018 estimates for FRO. 61 cents. Granted that two years in the biz is more crystal ball than fact.
But, if it plays out that way, then FRO is currently selling at 13x 2018. If price returns to mean, the 2018 pps based on historic multiple is somewhere around $4.50. That's a 40% down-leg in the next two years.
And it's not just FRO's 2018 eps that is being downgraded from 2016 and 2017. Take a look a TNK (which is looking attractive at the moment, IMO).
The decline in earnings might not happen. But the tea-leaves of ship deliveries etc. are all trending in that direction.
So... would one be better to play the price swings? Or try the buy-and-hold route - with crossed one fingers and a **hope** that the share price doesn't crater?
Also, FWIW, my interest in next week's cc is less about earnings than about funding of the NB orders. Things are still a bit fuzzy after the merger - this will be the first full quarter of the merged company.
Based on what I saw / interpreted from the first combined report, there isnt' sufficient cashflow to fund the commitments. If true, that would mean more gearing, a dilutive share issuance, or a reduction in the dividend payout. Maybe all three.
FRO's valuation vs. an outside-of-the-sector company is not useful meaningful, or useful, comparison.
FRO is selling for a bit over 6x 2016 earnings. That is only marginally below the historic average of 7 or so.
The thing is... 2017 estimates are at 1.06. Which puts the 2017 multiple at 7.5. Which is about at the average.
Next week's earnings report may be illuminating. But, at present, FRO appears to be fairly valued based on historic multiples.
Yes, the historic multiple is lower than that of a GE or an AMZN. But the company's own history provides a much better comparison than an out-of-sector company with different asset structure and business dynamics.
And it's not as if FRO is alone in having a traditionally lower multiple an a GE or an AMZN. Pretty much all of the tankers sell at similar multiples.
This is **one** of the reasons that some of us posting to this board are doubtful / skeptical of the $15+ prognostications of the resident pumpers.
IIRC, the last of the GOGL shares were distributed to FRO2012 shareholders (in lieu of a cash dividend) before the merger took place.
He's not exactly squeaky clean. Made his fortune war profiteering during the Iran / Iraq war. Has been busted in the US and Europe for price fixing and tax issues.
How quickly "we" forget that JF effectively hung FRO out-to-dry back when he created FRO2012. All the decent assets were moved to FRO2012 and FRO was left with the dregs in the anticipation of a BK.
Yes, JF did some shukin' and jivin' with SFL and the bankers to stave off a filing. But the reality is that it was a close run thing. If it weren't for the recovery in TCEs late last year, this board would probably be gone by now.
The FACT is that JF phhhucked-up... just like Peter G. Too many new boats. Too many new-build contracts. He's been playing a shell game between his various entities - FRO, FRO2012, SFL, GOGL, SDRL, etc. - for the past two years to keep the empire afloat.
The only consistently stable owner in this sector has been NAT. But even it is a loser over 5 years. It's the best house in a lousy neighborhood.
Yes it IS possible.
It would depend on one's timing, of course, but in the last three months there have been a number of opportunities to book short term profits (or losses, of course), two of which exceeded 10%. If one played it correctly, there were accumulated profits of apx 50% on offer (and almost double that if one was able to successfully play it both long *and* short).
OTOH, if one was doing buy-and-hold... then you are absolutely correct; the "investor" would be looking at a loss.
Which serves to underscore the point that FRO has *not* been a good buy-and-hold.
The volatility in the pps has, however, made it a decent vehicle for opportunistic swing trading.
There will have to be a "new Donald" on display if Trump has a prayer of besting Clinton in a debate.
HC is wrong about a lot of things. But she can marshal facts, however wrongly organized, and she has gravitas, even if she comes across as an ill-tempered old grandmother.
DT, in comparison, has so far come across as a vulgar, opinionated, bigot who cannot articulate a rational, credible argument to save his life - even on the few occasions when he might have been correct in identifying a problem.
If the debates go to form, HC will mop the stage with that braggart.
DT has done well so far by running the campaign of a huckster and appealing to the credulous, functionally illiterate wing of the Republican party.
That worked during the intra-party squabble. But DT is going to have present as a rational adult if he hopes to win the independent vote that he will need to beat HC in the general election.
Should be interesting.
If your point is that one can LOSE money on any "investment", sure; we agree.
We might even agree that ALL small cap stocks, in particular, tend toward the speculative end of the investment "spectrum".
But if one is going be an "investor" in the sense that one intends to buy-and-hold regardless of market volatility or the vicissitudes of corporate management, then one want to own something like a GE. Or a PG. Or any of the more "stable" stocks.
But not stuff like FRO - which is more the personal play toy of JF than it is a publicly traded corporation run, at least in theory, for the benefit of the common share holders. And in the case of FRO, this is disclosed in the 20-F.
"Hemen may be able to exercise significant influence over us and may have conflicts of interest with our other shareholders
As of December 31, 2015, Hemen Holding Ltd, or Hemen, a Cyprus holding company, indirectly controlled by trusts established by our Chairman and President, Mr. Fredriksen, for the benefit of his immediate family, owns 51.7% of our outstanding ordinary shares. For so long as Hemen owns a significant percentage of our outstanding ordinary shares, it may be able to exercise significant influence over us... The interests of Hemen may not coincide with the interests of other holders of our ordinary shares. To the extent that conflicts of interests may arise, Hemen may vote in a manner adverse to us or to you or other holders of our securities."
Well... what I'm saying is that there is a difference between an "investment" and a "speculation".
Anyone who confuses the latter with the former is bound to lose money... quite possibly a **lot** of money.
If one timed one's entrances and exits it was possible to make money.
Indeed. Some folks on this board have made a LOT of money buying and selling FRO.
And some have lost money doing so as well.
But the truly BIG losses were suffered by those who held, foolishly, perhaps, thinking that things - whether supply or demand for ships or wisdom of management - would improve.
The message to other folks sniffing around FRO, whether for the divy or for a spike in the pps, is that is *has* been a poor holding over the past few years. But it has *also* been possible to make some coin on the *volatility* in the pps.
FRO is not an "investment". It's a **speculation**.
As long as one realizes that, and plans accordingly, it can be an entertaining, and occasionally profitable, play.
But the Obama camp probably had to throw a "bone" to Clinton for the sake of harmonious party relations. They probably said "no way" to Clinton as Veep. Sec State was probably the smallest position she was willing to accept.
If Clinton was to win and do similar this time around, she might toss a "bone" to Sanders / Warren by offering Warren Treasury or Commerce. I'll be surprised if Sanders gets much, if anything, personally, for his troubles.
For veep... my beer bet is that she'll pick someone like O'Malley (assuming he would accept)..
An interesting twist would be if they kept Biden on as Veep.
What FRO needs is sustainable cash flow and profits and a reduction in its debt and newbuild commitments.
I'm hoping for a pop on Q1 numbers. After which I'll sell and then reload after reality sets in - which will probably be well into Q2.
No way Clinton would accept Warren as her veep. Those two are not exactly compatible.
Someone from the Sanders / Warren "wing" of the party? Perhaps. But... not Warren.
Your points are well taken. But remember that the government has been propping up the housing market, along with other risky assets, by pumping trillions of dollars of "fake" money into the financial system. That made / makes for inexpensive mortgages, which leads to higher home prices.
But to Ms. Warren's argument...
She posits that the effort to get one's kids into the best schools has led families to competitively bid house prices to a point where, for the average couple, a house is no longer affordable on a single income. Her "solution" - the mechanics of which she has never articulated - is to reduce house prices by 30%.
This is silly. In part because lenders or home owners would have to absorb a huge mark down in asset value. From a practical standpoint, how does one accomplish that? And in part because it would do nothing to prevent families from again bidding up the price of housing in an effort to get the kids into the "best" schools.
The only true solution would be to disconnect public school attendance from residence - basically assign slots in public schools on a lottery basis. Which is a variation on the 'busing' discussions of the 70s. In addition to being unworkable from a practical standpoint, as a policy that would probably be DOA with the electorate.
Ms. Warren may be correct that competition over what is essentially a school choice decision has resulted in families making some very unwise financial decisions. But her so-called "solution" to that problem makes Trump's comments about the housing crisis appear sage in comparison.
I was amazed at the flak that Trump got for wanting to benefit from the collapse in the housing market. If Ms. Warren ends up on the ticket, I hope*her* words come back to "bite" *her* on the subject.
She was a advocating, at least in theory, a 30% reduction in the housing market. Her objective was to make house prices more affordable for the average family. She didn't bother to address what happens to the finances of the families whose mortgages are all-of-a-sudden under water.
Ah... hate to bust the bubble, but "more than 50 years old" would date the systems to the 1960s. They were still wiring boards back then and in the process of "upgrading" to punch card systems.
As a firm believer in "if it ain't broke, don't fix it", I see no reason for the government to spend billions of $$$ in a Sisyphean cycle of renewal when it isn't necessary to do so.
Was talking a while back with a friend who works on weapons system guidance systems. He stated that many of the **modern** weapons employ unsophisticated technologies because (a) the technologies are proven (b) they're reliable (c) they get the job done (d) they involve minimal cost. What's not to like?
To change, just because technology has advanced, would be like trying to devise a new means of toasting bread just **because** technology has advanced. Why not stay with the 1960's toaster technology, albeit with a bagel slot "upgrade", if it does the job?
"All the people on this Earth are entitled to clean air"
As a non-religious person, you should know perfectly well that "all the people" are not entitled to squat. The planet and universe will do what they do without regard for the self aggrandizing whines of a petty specie such as #$%$ sapien.
Disagree? Just ask a Neanderthal.
Oh. Wait. You can't. They're extinct.
Cockroaches will survive. H. Sapien will not.
It's just a matter of time.
There is NO entitlement.