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

To: Walter Bagehot who wrote (37330)	4/10/2010 12:48:12 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78735

Walter - great analysis. I agree with your conclusions and the impact of future deliveries that has yet to peak. One argument however that some shipowners make is that deliveries of ships will be delayed or cancelled. The problem is that I have not seen many cancellations (presumably because of the penalties), so i am guessing that everybody hopes that the other guy cancels his orders. As for anializers point , the different size of GNK and FREE does not matter since I normalized to the $/DWTr ratio. i also clearly stated I look at the $/DWT ratio noted in the book and I still believe ,even adjusting for the different size of ships, FREE does not look good in that regard. If one were to look at valuation only the right unit to look at would be $(Enterprise Value)/DWT. FWIW, I checked EXM and GNK and they both seem to have their ships on the book for 0.69M$/DWT, so i think there is some validity to my approach.

To: Walter Bagehot who wrote (37330)	4/11/2010 7:42:33 AM
From: anializer	Read Replies (1) \| Respond to of 78735

Your reasoning sounds logical to me, but the stock market is not always logical. Quite often its the reverse. You seem to be forecasting a picture here that 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. 2011 year end and year 2012 are a long way off and handysize short term charter rates are going up now. There is no way I'm going throw cold water on your analysis, about year end 2011 and year 2012. But my experience has been that most analysts have trouble predicting exactly what conditions will be 2 -3 years out. It's too easy to extrapolate a scenario into the future that far based on a current set of fundamentals from the past which was one of the worst years in the shipping industry for many carriers. In 2000, analysts were extrapolating infinite growth of internet 2 years out and it didn't work. The majority thinks the shipping industry will be a clunker 2 years out. I wouldn't be too rigid in sticking to your pre-ordained scenario and avoiding a sector completely should the market start contradicting that scenario soon. So all I can say is that we know certain carriers are in better balance sheet shape than others and its a stock pickers market.