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Why Did Navios Maritime Partners Hit a New 52-Week Low?

Will Navios Maritime Partners Offer Upside from Here?

Price performance

The Guggenheim Shipping ETF (SEA), the index that tracks the global shipping index, has fallen 14% year-to-date (up to August 21, 2015). Diana Shipping (DSX) is the only company in the dry bulk shipping space that has gained amid falling spot and time charter rates since the start of this year.

Diana Shipping (DSX) has returned 6.8% year-to-date. DryShips (DRYS), Navios Maritime Partners (NMM), Navios Maritime Holdings (NM), and Safe Bulkers (SB) have lost 69%, 37%, 29%, and 16%, respectively, in the same period.

Many dry bulk stocks, including NMM, hit their 52-week lows on August 21 amid growth concerns from China (FXI).

Company overview

Navios Holdings formed NMM in 2007. NMM is engaged in seaborne transportation services for a range of dry bulk commodities, including iron ore, coal, grain, and fertilizer. Navios Holdings owns a 20% interest in Navios Maritime Partners, which includes a 2% general partner interest.

Navios Maritime Partners has a 2.2% holding in SEA. The SPDR S&P 500 ETF Trust (SPY) covers the broader industry index.

Navios Partners’ fleet

Navios Maritime Partners (NMM) operates 31 vessels with an average age of 8.1 years. NMM’s current fleet includes eight Capesize vessels, 12 Panamax vessels, and three Ultra-Handymax vessels. It also has eight container vessels. The company has started shifting its focus to containerships, as the dry bulk sector remains weak.

Since its inception, Navios has increased its distribution by 26.4%. It has also increased its fleet capacity, measured by deadweight tonnage (or DWT), by 420%.

Series overview

In this series, we’ll look at Navios Maritime Partners (NMM) and assess whether it will be able to provide above-average returns amid weak dry bulk market fundamentals. Some of NMM’s charter contracts are rolling over in the next 12 months. Most of these contracts have higher rates than current 12-month time charter rates.

We’ll see if the downside is already priced into the stock price or if there’s still more downside left. We’ll also see if the company’s foray into the container sector will be able to offset this decline.

Continue to Next Part

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