Wednesday, February 20, 2013

Baltic Trading Is Still A Buy: Earnings Preview For 2012 Q4

I had recommended Baltic Trading (BALT) last August as a value stock, as it was trading at a discount to its net asset value (NAV, as defined later). In this article, I will review the current financial position of BALT, including my estimates for its upcoming earnings results. Baltic Trading is scheduled to report earnings for the fourth quarter of 2012 on Wednesday, February 20th, after the market closing.

BALT is a dry-cargo shipping company that owns a fleet of 9 vessels ranging in DWT capacity from 34,000 MT to 178,000 MT. The average age of the fleet as of December 31st, 2012 was 3.2 years, so BALT owns one of the most modern fleets among publicly traded shipping companies. Based on last Friday's closing price of $3.36 per share, the company has a market capitalization of $77.3 million.

Continue Reading

Diana Containerships Earnings Preview For 2012 Q4

Diana Containerships (DCIX) is scheduled to report earnings for the fourth quarter of 2012 on Tuesday, Feb. 19. In this article I will provide an overview of the company's current financial position, including a preview of its upcoming earnings results.

Diana Containerships owns and operates a fleet of 10 panamax containerships, with an aggregate carrying capacity of 42,151 TEU and an average age of 14.8 years as of Dec. 31, 2012. The company was initially formed as a subsidiary of Diana Shipping (DSX) and was spun off as an independent entity in January 2011. DSX has retained a 10.4% equity stake in the company, in addition to full managerial control. Since the spin-off, DCIX has tapped the capital markets twice, raising a total of $184 million in gross proceeds.

Continue Reading

Nordic American Tankers Is A Sucker's Bet

For many years Nordic American Tankers (NAT) has been a favorite shipping stock, particularly among dividend-yield chasing investors, by offering outsized cash distributions to its shareholders regardless of freight market conditions.

But since current management took over operational control of the company in October 2004, its stock price has steadily drifted lower and lower, generating huge capital losses that have trampled in size the supposedly generous cash payouts.

In this article I will analyze how the company has managed to maintain a high-dividend payout strategy (while pursuing an aggressive fleet expansion at the same time) and why such strategy is unsustainable. In short, I will showcase why investing in NAT is a prime example of a sucker bet.

Continue Reading