Crow's Nest

Going out with the tide.

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Ahoy mates,

May all the sharks you meet have already eaten, have full bellies, and friendly dispositions.

The Dow make a big turn-around in the last few minutes of trading today and closed up 150 points. Shipping wasn't able to make that turn. It takes the big boats a bit more time to turn around. Crow's Nest lost about 1.27% today and finished with a NAV of $9.96.

The shipping industry is made up of 4 main sectors: containerships, tankers, drybulk vessels and gas carriers. The stock I'm blogging on today doesn't fit any of those categories and is a wee bit out of place in the Crow's Nest. It's Tidewater Inc. (TDW), a supply and support service company that services the offshore oil industry. It's also one of the few American companies in my fund. The company has 650 specialized vessels, the world's largest workboat fleet, to get the job done.

Tidewater has great fundamentals: A P.E. of 10.70, increasing sales and income growth, a net profit margin of more than 32%, and no debt. Today the company reported 1st quarter profits up 23% and the stock was beat down - losing $2.04 (2.98%). ??? No matter. It's a keeper. The stock is still up over 40% YTD.

Tidewater is one of my top tier stocks.

A very astute observer of my fund portfolio will see that my initial investment into the various shipping sectors is divided up as follows:

45% Drybulk
21% Tankers
13% Containerships
12% Gas Carriers
9% Supply & Service (TDW)

Robert

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1585

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Hey Sailors,

May you have fair winds and following seas.

Today the leader board was up and running on the Marketocracy web site. Out of a possible 1772 funds, Crow's Nest was rated 1585. 1585. I'll say it one more time, 1585. What could be better than starting off in the bottom 10%. A challenge! To quote Adm. D. G. Farragut: "Damn the torpedoes! Full speed ahead!"

Well, maybe not full speed. Crow's Nest made a couple of dollars today, literally. No change in NAV, $9.96.

Tonight I'll blog about Quintana Maritime Limited, (QMAR). It's one of my third tier picks. Another Greek drybulk carrier, they have 29 ships with another 8 on order. Their young (4.2 years average) fleet is about half Panamax and half Kamsarmax. The eight newbuildings are all Capesize. Despite a higher than average P.E., Quintana has excellent growth in sales and income and a dividend yield of 5.5%. They have stable cash flow from well-established and reputable charterers, Bunge S.A. being their biggest customer.

FYI: Panamax are the largest ships that will fit through the Panama Canal, 60,000 - 80,000 dwt. Kamsarmax are a little larger at about 82,000 dwt. for Port Kamsar in Equatorial Guinea. Capesize are 80,000 - 200,000 dwt. That's big!

Robert

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Sinking but Not Sunk

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Ahoy mates,

May all the barnacles on the side of your ship turn into birds of paradise and peace.

The stock market has been going up and down, up and down, for the last week. Crow's Nest and the shipping industry have been going down and down, down and down. The Dow ended up 2.18% today and the S&P was up 2.42%. Ummm, I was down 2.95%.

So, last Thursday I was bemoaning Crow's Nest NAV of $9.96 and being in 1585th place in the contest. Well ... Friday my NAV was down to $9.72 and I was in 1640th place. Today's NAV ended up (I mean down) at $9.43 and I can only go down another 133 spots in the ranking before scrapping the bottom. But we're only a little more than a week into a five month journey and there's no where to go but up.

I'll blog on my stock that went down the most today, a 9.66% drop. Seaspan Corp. (SSW). Seaspan, one my third tier investments, is one of two containership companies in the Crow's Nest portfolio. The other is Danaos Corp. (DAC). Seaspan owns 29 containerships with another 26 on order. Their customers are some of the world's largest liner companies including Denmark's A.P. Møller-Mærsk A/S and China's COSCO. Their dividend yield is now more than 5%. They have an experienced management team and though it's a Marshall Island's Corporation it's really a Canadian/Hong Kong operation with crews from India. The shipping industry is truly international. The company has good fundamentals and great growth and there was no reason for the beating it took in the market today. By the time this voyage is over I expect SSW to be up, up, and up to the Crow's Nest.

Robert

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Down deep enough to see Davy Jones' Locker

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Greetings Marketocranauts,

May you live in a blissful world.

Crow's Nest was down by another 3.something percent today and ended with a NAV of $9.14. Ranked toward the bottom at 1685. ALL 15 of my stocks were down today. ALL 15 of my stocks are losing money since inception. But we are never the less confident of sailing up in the clouds come December.

An English proverb says that a smooth sea never made a skilled mariner. Since this contest started it's been hurricanes, typhoons, cyclones, and tsunamis. But we are still afloat and building steam. Clear the way, we'll be passing through.

Starting with my next blog I'll briefly continue to profile two to three of my initial 15 picks until I've mentioned them all.

Robert

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Drybulk takes a beating.

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Ahoy mates,

May you have more love in your heart and less water in your grog.

Drybulk carriers as well as the rest of the shipping industry are taking a savage beating in the stock market. This despite rates for vessels carrying dry bulk cargoes such as iron ore, coal and grain being at their highest levels ever. The companies are also consistently reporting better than expected quarterly results.

An excellent overview of the drybulk industry can be found here: Drybulk Carrier Industry Overview.

As promised I'll blog on a few of my initial stock picks. Three of the seven drybulk carriers in Crow's Nest Portfolio of 15 shipping companies are:

DryShips, Inc. (DRYS) A Greek company that acquires and operates second hand drybulk carriers across the size spectrum, including large (Capesize), medium (Panamax) and small (Handymax and Handysize), and employing them in a combination of "spot charter", and "period time charter" contracts and pools. It has 33 ships in it's fleet plus two newbuildings and this month entered into agreements to acquire 8 more ships (3 second hand and 5 new builds). This mid sized company was picked because it is well run and growing.

Euroseas, Ltd. (ESEA) A Greek company formed by the Pittas family that operates drybulk and container ships. This week the company took delivery of two second hand (built in Korea, 1990) container ships bringing it's fleet to 13 vessels: 2 Panamax drybulk carriers, 2 Handysize drybulk carriers, 1 Intermediate container ship, 5 Handysize container ships, 2 Feeder container ships and a multipurpose dry cargo vessel. Euroseas employs its vessels on spot and period charters and through pool arrangements. It's fleet is the oldest in Crow's Nest but they believe that lower vessel operating expenses give them an advantage over other shippers. This small company was picked for it's great fundamentals and high dividend.

Genco Shipping & Trading Ltd. (GNK) This New York based company's fleet is growing from 19 ships to 34 through acquisitions from companies within the Metrostar Management Corporation group and affiliates of Evalend Shipping Co. S.A. Genco is positioned to expand its deadweight tonnage by approximately 185%. The size of their ships range across the spectrum. This mid size company has a good dividend and is rapidly growing. All of the vessels in Genco's current fleet are currently on long-term time charters.

Analysts rate all three companies as Moderate Buys.

Robert

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Oil and more.

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Ahoy mates,

May you know only happiness.

Today I'll blog on two of the tanker companies in Crow's Nest portfolio of shipping companies. Tankers are bulk cargo ships that transport liquids(wet bulk), such as crude oil, petroleum products, liquefied petroleum gas, LNG, and chemicals.

Tsakos Energy Navigation Ltd. (TNP) announced today that it took delivery of a new ice-class handysize product tanker bringing it's fleet to 44 with another 8 vessels in it's new build program. This diverse fleet (about half ice-class) consists of 27 crude transporters ranging from VLCCs to aframaxes and 24 product carriers ranging from handysize to aframaxes; and one LNG (liquefied natural gas carrier). This diversified fleet can better avoid market cycles. TEN Limited is incorporated in Bermuda and managed out of Athens Greece. Growth, professionalism, a low P.E., and dividend over 4% were factors in picking Tsakos for inclusion into Crow's Nest.

Aktieselskabet Dampskibsselskabet Torm (TRMD) owns vessels consisting of 31 product tankers and five dry bulk carriers. The company also charters six product tankers and seven drybulk carriers and manages approximately 46 vessels for third-party owners and charterers. TORM was founded in 1889 and is headquartered in Copenhagen, Denmark. TORM operates by it's pool partner concept - pool together ship-owners to provide one-stop shopping for it's customers. TORM has the largest market cap (2.5B) of any company in Crow's Nest except for Tidewater Inc. (TDW). TORM has a very low P.E. and a very high return on equity.

FYI: Tanker ship types by size (small to enormous):
Handymax - go places the bigger ships cannot go.
Panamax - max size for Panama Canal.
Aframax - Average Freight Rate Assessment Size.
Suezmax - max size for Suez Canal.
Capesize - have too travel around the capes (too big for the canals).
VLCC - very large crude carrier.
ULCC - ultra large crude carrier.

Tomorrow I'm selling Knightsbridge Tankers Limited (VLCCF). It's ships are getting older, and it's dividend and income growth are declining. I'm not sure yet where I'll put the proceeds. Maybe I'll spread it around some of my more promising drybulk companies.

Robert

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Liquified Gases

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Greetings Marketocracy Mariners,

May no obstacle come across your way.

Today we'll blog on two companies that have specialized tanker ships for the transportation of LNG and LPG.

At (-)260 degrees F, natural gas condenses to a liquid called liquefied natural gas (LNG). The liquid takes up only 1/600 of the volume of the natural gas. Japan, South Korea, and Taiwan are the largest importers of LNG and demand in China, India, and the US is growing rapidly. There has not been a major accident involving LNG tankers since maritime inception of the trade in 1959. LNG is shipped in super-cooled, pressurized tanks.

Golar LNG Limited (GLNG) The Norwegian company has 30 years of experience in LNG transportation and is listed on the NASDAQ and Oslo exchanges. It owns and operates a dozen vessels. It's customer's include BG Group, Pertamina, and Shell. Golar is converting two of it's ships into FSRU (Floating Storage & Regasification Units) for charter by Petrobras and is also working on other special projects like the Cyprus Floating Power Generating Plant (FPGP). Analyst consensus is a strong buy. Current dividend yield is over 10% and the P/E is a low 12.5.

Liquefied petroleum gas (LPG) is portable and can be stored as a liquid in tanks by applying pressure alone (think bottle under the BBQ). It is bought and sold as propane, butane, and mixtures. Among it's uses are cooking fuel, in vehicles as auto gas, home heating, refrigeration and air conditioning. LPG is also shipped under pressure but does not need to be cooled. The spherical tanks of gas carriers jut above the deck and give them a very specific look.

StealthGas Inc. (GASS), a Greek company, owns a fleet of 39 LPG carriers that operate worldwide. Once delivery of it's last three ships is complete, the fleet will have an average age of 10.1 years (industry average is 17). The plan is to own 46 ships by the end of 2008. Customers include Petredec, Dow Chemical, Finaval, Petrobras, and Shell. Analysts rate the company a moderate buy. Strong growth, focus, a dividend over 4%, and efficient operation make GASS a welcome part of Crow's Nest.

Many of the companies that make up the Crow's Nest portfolio are Greek. The Greek merchant fleet is the largest in the world. This past weekend wildfires destroyed many Greek villages and killed over 60 people. Some of the fires are still burning. Our prayers and wishes for go out for their quick resolution and a speedy recovery.

Robert

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