Must-know: An overview of Tsakos Energy Navigation (Part 4 of 7)
Tsakos’ investment strategies
Tsakos Energy Navigation (or TNP) adopts its policy of being a active low-cycle investor. Its highly experienced management charters out its strategies in the industry troughs where it can take advantage of low cost and gain higher profits through the same investment.
D. John Stavropoulos is the Chairman of Tsakos. He has memberships in many professional societies in the financial sector. Meanwhile, Michael G. Jolliffe is the co-founder and vice-chairman of the company. He’s a director of a number of companies in shipping, agency representation, shipbroking capital services, mining, and telemarketing.
Tsakos has directors who are renowned with expertise in the shipping industry and also the financial markets. With an immensely experienced and skilled team, TNP has all the capabilities to maintain their well-balanced chartering strategy along with stable revenues and returns for investors.
Fleet investments and growth
Tsakos is a repeat low-cycle investor. It’s active in the S&P markets with more than $280 million in capital gains. Over the long-term period, the company has grown its fleet size and has waited for peak-cycle investing.
Since its inception, the company has followed a continuous growth trajectory recording a 18% compound annual growth rate (or CAGR) based on deadweight tonnage (or dwt). Starting with four vessels of 0.2 million dwt in October 1993, TNP recorded 26 vessels of 2.3 million dwt in March, 2002, and surged to 60 vessels of 6.2 million dwt in May, 2014.
At the end of 1Q, active fleet utilization stood at 98% compared to 97.9% in the same quarter last year. Available days in secured revenue contracts—including CoAs or Pools—stood at 57% of remaining 2014, 36% of 2015, and 23% of 2016.
Impact on operating cost
For the 1Q14, the company’s operating cost increased to $36.4 million from $31.3 million in the same quarter last year. More than half of the increase was due to the addition of two shuttle tankers. The remaining increase was due to the weakening dollar against the Euro in the first two quarters.
Not only does the company believe that the new vessels’ operating costs would be easily covered leaving a lucrative margin, but also it estimates the average daily operating costs per quarter will be lower during the remainder of the year.
DHT Holdings Inc. (DHT), Teekay Tankers Ltd. (TNK), Navios Maritime Acquisition (NNA), and Nordic American Tankers (NAT) are company peers while the Guggenheim Shipping ETF (SEA) tracks the shipping companies.
Browse this series on Market Realist:
- Part 1 - Overview: Tsakos Energy Navigation
- Part 2 - Must-know: Tsakos’ fleet structure and investments
- Part 3 - Why the chartering strategy supports growth and dividend
- Investment & Company Information
- investment strategies