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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: - with a K who wrote (23638)	3/24/2006 2:00:36 PM
From: Paul Senior	Respond to of 78702

Shippers: I'm still buying them the way I have been: on valuation. My results though don't seem too impressive...somewhat disheartening actually. I don't know much about the managements of these companies,although I get more confidence the more I read managements' reports and see their results (e.g. TNP) My impression is that most of these companies are run by Greek entrepreneurs some of whom are trying cash in on naive investors like me who are attracted to the sector because of presumed low p/e's and dividends or the popularity of the business when times were good (past couple years). Indication of this is the large number of privately held businesses going public at top of market. Trying to get and use knowledge about ships' ages, capacities, routes, spot vs. fixed rates, debt capacities -- in order to conclude with an intelligent decision to buy or sell a stock or stocks in the sector, is near impossible and a waste of time for normal people. (jmo) My conclusion is that it's just best to buy a package of these shippers when valuation criteria are met, and then let the best companies rise. I still have positions in every tanker stock I've mentioned here over the past few years. Some are full positions; I've probably stayed too long in them. Others are outright losers for me, and where I've just cut back to mere stub holdings (e.g. GMR). Here's what I have, fwiw: finance.yahoo.com (addendum: My interest is in oil tanker stocks. No opinion on bulk cargo stocks.)

To: - with a K who wrote (23638)	3/24/2006 6:44:14 PM
From: sportsman	Respond to of 78702

K, My criteria: first and foremost, dividend and future expectations for dividend, which leads to percent of long term contracts age of ships type of ships in fleet debt valuation I agree with Paul on management, it's usually difficult to learn much about management since most of these are Greek operations. I love high dividends and have played the shippers, Canadian royalty trusts and MLP's for many years. I buy 'em when I feel they are cheap and sell them when I think they are over valued and collect the distributions in between. I currently own no Canadian royalty trusts due to my current pessimism on natural gas. I have been picking up MLP's recently after been light on the sector for a year or two. I'm no expert, just my criteria Sportsman

To: - with a K who wrote (23638)	3/24/2006 8:33:14 PM
From: E_K_S	Read Replies (1) \| Respond to of 78702

Hi- with a K - My criteria for the shippers is similar to the others but I am buying this position as an alternative to other similar revenue producing investments specifically REITs. I am looking for a stream of dividends (best if "qualified") that are generated from the business, that are some what fixed and provide an equity kicker as the company grows. If I can accomplish this by buying value (i.e.. $0.50 on the dollar) it makes a good long term holding in my portfolio. The key to my analysis is "qualified" dividend income. Many of the REITs and limited partnership trust investments DO NOT have "qualified" dividend income. Their distributions are taxed as ordinary income (both Federal & State). However, many of these shippers do pay a "qualified" dividend (are taxed at a maximum of 15% Federal) so the after tax gains are significant. Currently I have 6% of my portfolio(s) invested in shipping companies including both my taxable and IRA accounts. I like SFL (http://finance.yahoo.com/q?s=sfl) which is a company that finances oil tanker ships. Their biggest customer is Frontline Ltd. (FRO) and eventually will grow their business to provide fleet financing to several other shippers. Under their standard financing agreement, SFL receives a 5% profit sharing distribution (as an added dividend) when the fleet generates more than contracted revenues each quarter (usually as a result of higher day rates for the previous quarter). SFL has paid this extra 5% kicker dividend since their inception last year. I have added other shippers to my holdings that appear undervalued based on the company book value, have potential growing "leveraged" revenues as day rates go higher and most importantly have the staying power and management experience to weather the volatile day rate cycles. The key is to balance debit and cash flow as well as the age of the fleet. Hopefully, this will provide an additional equity kicker to my core holding SFL. The current dividend return is just under three times that of what I can get by buying 10 year treasury bills at 4%. This becomes an attractive "value" investment when viewed based on the income generated from the "qualified" dividend stream from my basket of shipping stocks. To summarize, this is a long term "value" investment for me that generates "qualified" dividend income with an equity kicker (as long as management performs and sector growth continues). It's possible to also play the cyclical "value" proposition and load up when day rates are low and then be quick with the trigger and sell as day rates peak. This type of speculation is not important in my investment decision but can help my overall return if I am right. That's how I see it. I may be wrong in my analysis and there is always company specific issues that can arise which sour the investment. That's why it is important to diversify. However, the sector PE, cash flow from operations and future global growth prospects make this a compelling investment for me. EKS