Crow's Nest

Out with the Tide(water).

Rating: 0.63 not yet rated(40 votes)    Vote:

You are logged in as | Logout

Ahoy mates,

May you find true and lasting happiness!

Yesterday we sold our position in Tidewater Inc. (TDW) for about a two and a half percent loss. We sold it simply because the company didn't fit in well with the rest of Crow's Nest. Tidewater is basically a oil service company while all the other companies in the portfolio are trans-ocean shippers of cargo. Tidewater is a great company with strong fundamentals.

Tidewater had by far the largest fleet (454) and market cap (3.7B) of any company in Crow's Nest. Now that it's a memory, our largest company is Aktieselskabet Dampskibsselskabet Torm (TRDM) (2.7B) closely followed by DryShips, Inc. (DRYS) (2.6B). Eight companies have market caps from 1B to 1.9B. The remaining 3 have market caps less than 1B, the smallest being Euroseas, Ltd. (ESEA) (263M).

We've shifted around some of the allocations. A higher percentage will be going to Dryships and Excel Maritime Carriers, Ltd. (EXM), less to Euroseas and Torm. The shifts were made based on fundamentals and giving more share to dry bulkers as opposed to tankers, gas carriers, and container ships. We believe dry bulk rates will continue to be extremely strong and that that sector will continue to beat the others.

The importance of shipping to world trade cannot be overstated. A very small percentage of the world's merchant ships are owned by publicly traded companies. These companies should do well for at least the next few years and we expect to profit handsomely from them.

Robert

Comments: 0

Magick Boxes

Rating: 1.68 not yet rated(22 votes)    Vote:

You are logged in as | Logout

Greetings SLO Seafarers,

May you find happiness and keep it forever.

The shipping container was one of the most important innovations of the last century. They can be carried, sealed and loaded, on containerships, trucks, railroad cars, and planes. They've been carried by ships for about 50 years. Thanks to the shipping container there is more world trade, and it is more efficient and costs less.

If you woke up tomorrow morning and all the Apple iPhones, colorful Crocs shoes, and Starbucks frappuccinos in the world disappeared into thin air, would it really matter? Most of the world's people wouldn't even notice.

If you woke up tomorrow morning and all the containerships in the world were gone, most of the economies in nations on six continents would decline or collapse, trade would slow to a trickle, and many people would begin to starve.

My point is that certain things really matter and cannot be done without. The companies that provide these essentials are what I prefer to invest in.

In Crow's Nest portfolio of maritime shipping companies there are two stocks of companies that own containerships exclusively. They are Seaspan Corp. which I blogged about on August 8 and Danaos Corporation (DAC). Both are up about 40% YTD. Unfortunately, I bought them both at their 52 week highs when the SLO contest began and, as a result, am losing money on both. Danaos has the largest loss, about 8%, since then. Still it remains one of my top tier investments for many reasons.

Danaos has a similar market cap to Seaspan, about 1.8B, and comparable debt/equity ratio, near 1. But Danaos has a low PE of only 8.9 and a ROE of more than 40. The company owns 33 ships with 30 more scheduled for delivery between now and 2011.

Danaos' strengths include long standing relationships with the world's leading liner companies and stable cash flows through long term charters. The company is headquartered in Piraeus, Greece and has chartering offices in Hamburg and crewing departments in Odessa, Ukraine.

It's experienced leaders are committed to customer service and technological leadership.

Looking for another stock for your SLO portfolio? Danaos Corporation (DAC) is recommended as a moderate buy by analysts and is still off it's July highs. Oh, I almost forgot the dividend yield of more than 5%.

Robert

Comments: 1