Well, except that this sort of thing tends to bleed over to clean rates. If you can believe the broker assessment on Hellenic Shipping News, time charters for LR1s are just shy of $20k/day all the way out to 5 year deals. Those number have not been seen in a long, long time.
Bupkis volume again today. Anyone notice that MR rates are starting to regain mojo with LRs already in full party mode? Bueller?
You may be right, but it is very hard to ignore oil/product market dynamics. It is becoming clear to me that land-based oil storage is going to be full within the next 3 or 4 months. Since we are already in contango and nobody seems eager to shut in wells, that means that incremental excess oil will get put up in ships. We all know what happens when floating storage becomes a big factor. I expect at that point you will see the likes of NNA locking in multiyear charters on whatever ships it can manage. That will pave the way for sales down to NAP, some delivering, and very likely a bump in the dividend since future earnings will be pretty clear. At some point all of this will influence investors to look more favorably on NNA. If we are lucky, Cramer/Gartman/some other idiot will help by pounding the table and driving the herd in.
The writedowns are essentially meaningless. All non-cash stuff that just reflects what everyone already knows: prices are lower than in the past and drilling activity will be reduced in response. The hydrocarbons are still in the ground and will get produced when prices warrant.
Have been on a tear. If you believe intertanko, these ships are earning more than VLCCs when you compare the Aruba-NY Pana route to AG-Japan for VLCCs. LT charter rates have moved up as well. It appears that charters as far out #$%$ years can be had for ~$20k/day. I imagine this will be stimulative for MR rates as well. And I keep hearing that NNA, STNG and other companies have "too much" products exposure...
I think NM and NNA are the pick of the litter. NM is diversified across bulk, containers, tankers and the South American operation. NNA is in the sweet spot for what is looking like a great year (years?) for tanker earnings. Both are cheap and neither is an MLP.
Check out LR1/Panamax rates. You would think this would get someone's interest. Meanwhile, NNA struggles to get to half of average daily volume. I have no idea why the tanker segment is not getting bid up like crazy. They will make some real money for the first time in years and have the option to lock in longer term time charters at attractive rates.
Management pinned the tail on the donkey. They suggest that NSAL has EV of $1Bn. If you back out the net debt on the company and figure out what NM's share of the equity is worth, I come up with roughly $400MM. That is roughly equivalent to NM's current market cap.
Floating storage demand has evaporated because contango is not wide enough to make it profitable. When cheaper land-based storage gets filled you will see contango widen out (as long as there is excess supply) because the marginal supply facility will be a ship. Conversely, tanker rates have a floor under them so long as there is conatngo in the curve. I fail to see problems here.
True, but day rates and asset values are usually highly correlated, so there is not a lot of daylight between when asset value harvests and operating earnings happen.
Difference of opinion makes a market, as they say. What determines the success or failure of NNA as an investment is basically day rates, same as any other tanker company. It is clear to me that the market has fundamentally turned, so I think the rebound I have been patiently waiting for is at hand. Other investors either do not know it or do not believe it. If the rebound is for real, they will get on board eventually.
If you have a difference of opinion, great. Feel free to sell your shares. All the popular kids seem to be doing it.
Frequently there are quiet periods when they cannot buy back. Don't know if that was a factor.
Despite all the whining on this board and the lack of translation to stock price movement, I think that Q4 was an interesting report. For the first time since it started, NNA no longer has any newbuilds in the works. Management also seemed pretty clear that no further newbuilds are contemplated. Instead, I heard 3 things that will be the go-forward plan:
- Vessels to be bought will be in the water, to the extent they find stuff worth buying.
- The focus is turning from short term charters to long term (3+ years) with a view toward locking in long term revenue visibility. It seems likely that NNA will wait for charterers to come to the table rather than trying to force these deals.
- Lower leverage levels appear to be in the future. It is pretty clear that management is planning to get to 40 to 50% leverage in the medium term, similar to what the people who run STNG have targeted as their long term leverage tolerance. Clearly they are not allergic to new debt if they find a sufficiently attractive deal, but the trend will be down over the next 2 to 3 years is my guess.
It looks to me like NNA has matured and we will see steadily increasing earnings, more modest fleet growth, better revenue visibility and likely the use of NAP for equity raising activities.
I hear your buddies that ran ULTR into the ground might be available...
I heard cogent answers to everything that was asked of management. If you cannot understand what they are saying or read between the lines as necessary, sell your shares and go elsewhere with the capital. This management has never done the rah-rah thing and they probably never will.