SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: brasilboy46 who wrote (47069)3/16/2012 10:08:06 AM
From: E_K_S  Read Replies (1) of 78764
 
Hi brasilboy -

My main concern for SFL is that their biggest customer (FRO) accounts for 35% of their revenues. Remember SFL is not a shipper but finances these ships under long term contracts. The ships are essentially mortgaged to SFL (avg of their fleet leases is 13 years). FRO was having significant cash flow problems due to very low day rates and could not meet their finance obligations to SFL. Many of their contracts were restructured to provide lower payments but higher profit sharing w/ backing by billionaire Fredricksen (who owns a large equity interest in each company).

So w/ their LT Debit/Total Capital of 69% is not that different than w/ a leveraged REIT. One customer that goes BK and/or can not meet their LT contract terms could/will hurt the financing company. I think SFL has seen the bottom in their FCF (went negative late last year) and with the loan restructure for FRO and higher charter day rates is in much better condition.

It's also nice to have a billionaire backstop that can step in and resolve any/all financial problems w/ his checkbook.

ULTR has been a disappointment for me but the company is well positioned in the niche shipping markets they serve. They have been investing in their River business and should start growing that segment of their business. I am currently holding for the next market cycle (it always seems like it's the next quarter they will start putting up back to back EPS gains). I see that Paul Senior gave up on his shares.

EKS
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News