$NMM trades at 35% of NAV. The logical thing, a money machine... would be to sell vessels and buy back stocks. The company instantly would tripple its money doing that.
Navios instead does the opposite.
Shocking seeing this presented as positive.
From the moment I mentioned Navios here, buying the late Navios containers, I pointed out that this is not a normal company. It really REALLY deserves to trade at a discount. It is among the worst you find in shipping when it comes to managements not being aligned with minority
People can absolutely and probably should speculate in $NMM because it is such a great setup. But everyone should also understand that it is not a company working for YOU. And do not say shipping is horrible if U loose money on unpleasant stuff Navios does.
No position currently
If anything I would say that the abuse of the minority lately is picking up from Navios. The ATMs are not financially stressed behavior it is most likely all about the main shareholder making her money on fees on the number of ships while controlling the companies with few shares
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New kid on the block is Eagle, small dry bulk ships.
Not all ECO but decent and it is really in the large ship segments ECO is most important. Top mgt without historical issues.
Besides its ECO share, most ships are also scrubber fitted. The company is making an absurd amount of money at current rates from Q3 it should be viewed as heavily spot and that means trading on something like P/E 1.3 as everything above 10k per day is Earnings on 53 vessels.
I am not saying these 32k per day will stay the coming year. But I am saying that so far they seem quite sticky and not so volatile. To some extent this is probably due to both being impacted but the same distortions as containers (without having that awful orderbook) +
What I have learned over the years is that good companies are often better than they look and bad companies are often worse than they look.
I have presented the case with SD for Capstone but when you look at this chart and see the potential of 440m pounds (everything under 70%
kept share of SD is old and unrealistic imo) And this possibly at a total cashcost of zero if iron ore, cobalt, sulphur & silver stays strong... but understand that from my listening of conf calls I think some serious growth through aquisition of old closed assets from majors is
brewing in Capstone. In fact the CEO put it something like this: Those negotiations and SD production decision is the most important for 2021.
The majors have no mill and assets are too small for them but for CS it could AGAIN be transformational... and again.. you get this free
$CS Capstone Santo Domingo project:
When we probably face a very strong price cycle I like mines with many different metals where 1-2 are treated as offsetting credit on cost.
What you get then is basically both higher metal price AND lower cost (due to more valuable credit).
SD in Chile looks Great... but the point is that it could be much better than that. It could be profitable like few other copper mines because it is:
Copper (3 vs 4.5) +
- Top Q 65% iron ore (80 vs 220)
- World class cobalt (20 vs 25)
- Gold (cashed to build mine)
- Sulphur
So this is the starting point and then you can start the fun of thinking where the cash cost would be if for example iron ore holds up reasonable. Know that 65% iron ore is premium vs the good stuff (62%).
I have my reward scenario for $OET somewhere around divs 50nok per year etc. My $OET risk thinking beyond Nov21 (if a worst case scenario hits) is like this:
17 ships
4 VLs can stay fixed 3y more and the rates incr 18k total 2m out from now.
1 more VL is fixed at 46k 2y more
2 Smaxes fixed at 29k 2y
So 8 of 17 can (but does not have to) stay fixed to protect.
Remaining (from Nov) 9 ships are ECO & scrubber with about a 10k advantage so if standard ships earn zero they earn 10k.
Then you basically have another 10k above cost from the 8 fixed
So combine the ECO with what comes from 8x profit ships and you will break even at 0 rate environment
But then you also have the fact that OETs ships are so attractive that they can always do a decent deal on a ship covering that ships cost. Negotiation is mostly how long time
Quite amazing and I can only repeat: Bullish for all the other parts of shipping as: 1. Yard capacity fills up 2. Yards no longer feel the need to do lossmaking deals
Yesterday I was unfortunately subject to a lot of aggression at a SA forum I am member of as well as from a new Twitter account that later was either deleted or taken down (not cause of me)
I did a number of blockings of the people that posted, liked & I hold responsible
Not fun
I really like Twitter and if it was their system that identified and removed a new account that was only bullying, then that was impressive.
The SA forum I have boycotted (writing) for months to make it super clear that it was not an "argument" but simply.. bullying.
Going back 10m or so my idea was that I wanted to own #2020Bulkers for the post covid world wide stimulus benefitting iron ore & steel, my guess was that Q2 2021 was the time for cape rates to strengthen. The stock has already doubled incl divs as it traded so much below NAV then
My other even larger holding was $OET with the thought rates would strengthen in Q4 2021 on a revival of flying. I also expected the ECO advantage to increase with higher oilprice and the fuel spread to widen with less plane fuel blendstock available. After large divs my $OET
cost is below 50nok so at least a 50% gain.
Its been a generally good shipping market in Q1 2021, for me almost 60% on the portfolio. But I think it is also fair to make the point again that markets are forward looking.