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(The Street)   In market selloffs, remember the difference between 'cheap' and 'lower'   ( realmoney.thestreet.com) divider line
    More: PSA, Stock market, Navios Maritime Acquisition, oil tanker, Asset, NNA, Investment, cheap oil tanker, tanker shipping stocks  
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1033 clicks; posted to Business » on 05 Feb 2018 at 3:35 PM (23 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



10 Comments     (+0 »)
 
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2018-02-05 02:00:12 PM  
'relatively cheap' will end up being good enough here
 
2018-02-05 02:33:54 PM  
Good find, Submitter. I learned something today. Thanks.
 
2018-02-05 03:46:37 PM  
There's a touch of predicting the lifetime demands on the tanker fleet, either before obsolescence or market forces. A more refined inspection of the company would turn up the age and capacity of the little fleet, probably not more than 10 ships. It's something I guess a few minor investors could throw a few thousand dollars at, but I wouldn't expect large investors to steer their course amongst those shallows.
 
2018-02-05 03:52:40 PM  
fewer
 
2018-02-05 03:57:05 PM  

wildcardjack: There's a touch of predicting the lifetime demands on the tanker fleet, either before obsolescence or market forces. A more refined inspection of the company would turn up the age and capacity of the little fleet, probably not more than 10 ships. It's something I guess a few minor investors could throw a few thousand dollars at, but I wouldn't expect large investors to steer their course amongst those shallows.


In the shipping industry, obsolescence has become relatively rapid in the last decade or so. The Panama Canal is larger. Shipbuilding techniques have undergone a revolution, making ever-larger ships not just possible but commonplace. An operator needs to recoup the capital investment in the newest ship within the first year of operation; having a fleet of older vessels just isn't as lucrative as it once was unless you're competing for the less-traveled routes.

This guy might be a 'buy' on some of these stocks. I'm still recommending 'avoid'. Better money in the shipbuilders, containers, or actual goods.
 
2018-02-05 04:00:03 PM  
img.fark.netView Full Size
 
2018-02-05 04:11:59 PM  
Nobody rushes to the store in a 5% off sale.
 
2018-02-05 04:18:02 PM  
Those tanker companies have a terrible business model.
Sell shares of stock, buy an oil tanker, pass on the profit as dividends. Seems great until the tanker is too old for maintenance and has to be retired. Now you issue more shares of stock just to maintain the income. They also make a lot of money on depreciation, then sell them to a subsidiary. Frontline was notorious for this.
That's not even getting into the glut of oil supply issue that will now never go away thanks to U.S. rig capacity.

Most people just see 18% yield and lose their minds without stopping to think why something is that high a yield.
 
2018-02-05 05:00:59 PM  
Never try and snatch a falling lawn dart.
 
2018-02-05 05:09:26 PM  

AlanMooresBeard: Those tanker companies have a terrible business model.
Sell shares of stock, buy an oil tanker, pass on the profit as dividends. Seems great until the tanker is too old for maintenance and has to be retired. Now you issue more shares of stock just to maintain the income. They also make a lot of money on depreciation, then sell them to a subsidiary. Frontline was notorious for this.
That's not even getting into the glut of oil supply issue that will now never go away thanks to U.S. rig capacity.

Most people just see 18% yield and lose their minds without stopping to think why something is that high a yield.


OK, so it wasn't just me that had the impression that many of these companies have ridiculous book values and are really long-term zombies.

I don't think Hanjin's liquidator was even able to sell of most of its hulls, the market just last year was saturated.
 
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