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

To: anializer who wrote (37321)	4/10/2010 12:48:26 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78711

Anializer - thanks for your kind words. Be assured there is no personal animosity. I think FREE is a potential winner here, but I am not sure about the margin of safety. I am pretty sure that the tangible book value is higher than the NAV but i don't know how much. management disclosures don't give me a warm fuzzy feeling either. We discussed OCNF and FREE at the same time last year and OCNF has not done too well - too much dilution close to the bottom. FREE is better but I am not sure how much. The shipping companies overall have not done too well, I think most of the equity prices are correlated to the intrinsic NAV of their fleet and that NAV has not done much. Why is the NAV so important? Well those companies don't really have any moat, ships are plentiful, as there is a glut coming to the market, based on newbuild orders placed a couple of years ago. The shipping sector is volatile and good money can be made here based on what happened a couple of years ago. I was trying to get more information regarding NAV of ships and was unsuccessful although a more ambitious investor may be able to find the answer - i just don't know with the limited time I have. From a 1st order principle perspective I expect the value of ships to be a more or less linear function of a) age and b) tonnage (assuming ships are a commodity and more or less the same), so one should be able to build a correlation chart and estimate the value of a ship fleet with a decent margin or error. problem is, I can't really find decent transaction values to do this correlation, but I am sure someone smart has done this and knows what these companies are worth in terms of tanker fleet NAV. Frustrating. if someone can find a source regarding recent transaction values that list age and tonnage, i would appreciate it.

To: anializer who wrote (37321)	4/10/2010 12:25:17 PM
From: Walter Bagehot	1 Recommendation Read Replies (2) \| Respond to of 78711

Not to worry - I am here for the debate and discussion, and to learn more about value investing myself! On shipping, let me play our some scenarios for you as to why I think it is dangerous, in addition to the comments I left on the shipping board and my earlier elaborations: - Drybulk fleet is c.450m DWT, with an additional c.250mDWT on order, c.100mDWT of which is due for delivery this year and the remainder before 2014. - Pre-2008, 25mDWT was the most deliveries in any one year - 2009 resulted in c.50mDWT of deliveries - Excepting a spike in 2004 as China enters the fray, max growth in ton mile demand was c.7% p.a.: vessel deliveries far exceed this growth, and scrapping of old vessels would have to far exceed all historical precedents to re-align supply and demand - Oh, and the largest fleets are the youngest as well, which is not going to be conducive to pushing owners to scrap those nice young vessels So, even with strong growth and halving of deliveries as compared to orders, the fleet supply and demand is heading towards being well out-of-kilter by year-end and into 2011-12 as well. - Vessel values today remain above historical long-run averages, including inflation. Most public companies have yet to write-down fleets if they are still earning on long-term charters or at least covering operating and finance expenses. I would not even look at price-to-book, historical dividend records or past earnings record in this industry, as they don't provide any margin of safety or guide to future. That is before any thought of refinancing, covering balloon debt payments, covering newbuilding finance commitments (if any), two-pocket situations, dilution etc. I don't buy the China arguments for taking all this new demand - the ports don't exist, and the internal demand doesn't exist that can permit demand growth of 20%pa to absorb this new capacity. What do you think of my reasoning? Best regards, Alex