Dry Bulk Morning Update

Physical:  Capes finally make a nice upmove, gaining 330 to 8900.  PMs lose more than a hundo to about 10,100 - while the diminutive classes are flat on the day.

FFAs:  Capes sold early but bounced back soon thereafter - with rumors of a better physical market confirmed by today's indices.  Nearby Capes up 600 to 9700 with Q3 and Q4 gaining about 400 each to 11,750 and 14,750.  PMs and Supras are unch on the nearby - with both pricing in the 10400 region.

ESEA has reported Q1 earnings.  Quick take from Mike Webber at Wells Fargo here:  

"...ESEA posted adjusted Q1 EPS of $0.00, above our estimate of -$0.03 and Consensus of -$0.04, driven primarily by lower-than-expected drydocking ($0.03/share) and operating expenses ($0.01/share), partially offset by lower-than-expected net revenues (several containerships experienced offhire while seeking employment in Q1). ESEA cut its quarterly dividend by $0.01/share to $0.04/share…citing the weak market (although it noted it believes the containership market has bottomed) and its desire to grow its fleet along the bottom of the cycle… ESEA reiterated its plan to raise funds through a rights offering..."

He maintains Market Perform.

Investment Advice on the TMT...nah

Reader comment provided by Pete;

“Hey I normally love checking out the blog for a somewhat neutral source of information. You guys do a great job of providing that. Although I think the subtle trade ideas with innuendos are a disservice. So I refer specifically to Eagle, I agree with you that the fundamentals are horrible, it has big catalysts coming up, including a reverse split in a week. It has fell hard and fast and may be slightly oversold, however would you in good faith tell someone to buy EGLE without telling them when to sell it? The week before and after the reverse split will be very volatile, and multiple big players with opposing interests will be trying to manipulate the price, especially pre split. Just my opinion, and again I truthfully like the investment ideas. Just a bigger picture with more clarity and disclosurr if you do it.”   Pete

Ahoy Pete,

I am not sure how regular a reader you might be but I will try to clarify a few points with you and anyone else that may be following.  The only true advice I offer is the idea that this sector better suits an attentive momentum investor compared to a traditional long.  The weekly report we publish has a section we call the Top & Bottom 5 Day.  In this section we offer alerts to readers when a stock has been a repeat performer leading the sector one way or another.  It is then out of both a sense of humor, coupled with statistical analysis we offer a contrarian wager or gamble.  It is not an investment.  It is for fun if you want to play a turn. 

The TMT website has a disclaimer that conveys clearly what our position is.  I doubt any of our readers would invest based solely on what they read here.  They know better than to be like that.

Good Fortunes

Ski 

Morning Report

Good Morning

The FFA’s are coming in with the capes getting a little softer nearby whilst the smaller vessel classes remain largely unchanged.  In the physical world our favorite index has been released with the BDI losing a couple points mostly due to the BPI losing ground again.  BDI @ 1130.

I will be posting a response to a reader comment about investment advice momentarily. 

Good Fortunes

Dry Bulk Update

FFAs:  Mostly flat on low volume - though PMs lose a hundo on the nearby.  May/June prices as follows:  Cape 9500, PM 10350, Supra 10900.  Not much to read into here.

Physical:  Though the diminutive Handys gained a hundo up to almost 9400, the larger classes have ceded ground.  Capes down 65 to 8600, PMs down almost 200 to 10360 and Supras down 28 to 11600.

I watched the movie "Rogue Trader" a few times over the weekend.  At risk of sounding like a snob - the book was much better.  That said - if you haven't been in a position of throwing up in the middle of a truly disastrous trade - then you arent trading hard enough.  More on "Rogue Trader" later....

about that

Ahoy There!

I received an e-mail recently from a TMT reader that has put me back a bit.  The reader politely asked me if I was able to provide a link that relates to the SEC directing shipping companies about fair market value disclosures that I have been telling you folks about.  I have put it out there that the sec is all over the shippers to get the vessel valuations to reflect current market levels.  Our reader has researched the matter looking for a “comment letter” or something similar that would contain the written directions from the sec telling the shipper to change this or that.  He had found none and asked me if I had, to tell him where.  Fair enough

To be honest, I have not seen any communication of any kind except the 20f filing.  The way I became informed of the sec involvement plain and simple…. I was told about it from an industry participant whom I trust as a source of honest information.  If that wasn’t bad enough, I will not even tell you who it was that told me so.  I have made some friends with folks who consider our relationship private.  This is shipping.  Anyhow my apologies for the cloak and dagger, now I have to kill you.. secrecy.

Good Fortunes

reader comment below

I have commented a couple of times about the SEC-recommended disclosures here on TMT. You could look up correspondence between listed companies and SEC - for example, NMM got a comment letter recently: http://www.sec.gov/Archives/edgar/data/1415921/000000000011070917/filename1.pdf - check comment 2.

For GNK, see comment 5 here: http://www.sec.gov/Archives/edgar/data/1326200/000092242311000149/filename1.htm
For SFL, see comment 4 here: http://www.sec.gov/Archives/edgar/data/1289877/000000000011039977/filename1.pdf

A repeated SEC comment gradually becomes practice for the whole sector - this is the also the case, for example, with risk factors: some are basically used verbatim for all sector companies.

All this is very public, nothing controversial and I can't understand the caginess of your post.

Sun, May 13, 2012 at 12:19 | Parquet

Agent 007

DSX Vessel Carrying Value Examination

Diana Shipping Inc. (DSX)

This is an examination of the current market value of DSX vessels to be compared with the carrying value posted by the company if possible.  In this case it will be easy because DSX in filing the latest 20f has created a table listing the carrying value it of each vessel.  

There are 8 Capesize vessels with an average age of 5.625 years.  The oldest Cape registers 10 years of duty while the newest Cape is reported as 2 years old.  The combined value of these vessels in the second hand market =$269M.

There is one post panamax aged two years.  The value of this vessel in the second hand market =$28M.

There are 15 Panamax vessels with an average age of 8.6 years.  The oldest panamax is reported at 11 years old and the newest panamax is 5 years old.  The combined value of these vessels in the second hand market =$291M.

The combined value of all the above listed vessels =$588M

S&P Data total          DSX Data total        overstated value

$588M                      $1,046.7M              $458.7M

Notes;  newbuilds are not considered

S&P data from crs (we are using the same resale numbers even as the market hasfurther declined.) 

Average age is not used in any calculations

Charter value is not considered

Good Fortunes

Dry Bits Week 19

Ahoy There!!!      Week #19

Top & Bottom 5 Day:   GPRT @84.75 (+3.30%), SFL @12.96 (+2.28%), SHIP @3.18 (+1.27%) >>>

DRYS @7.60 (-11.68%), EGLE @1.08 (-15.62%), FREE @0.82 (-26.12%).  For the record EGLE has made the T&B 5Day laggard list 3 weeks consecutively.  Under normal circumstance this triggers an alert.  Ask yourself if EGLE has been getting unfairly hammered.  Then place your bets….Boomer James chimes in something about fundamentals meaning nothing anymore and places a wager that EGLE will rise next week.

The Baltic Exchange:  BDI =1138 down 1.64%, BCI =1614 up 2.41%, BPI =1322 down big 13.42%,

BSI =1112 down 0.53%, BHSI =616 up 2.32%.  The panasisters getting punished for making their run….

The Fixtures: Coal =5, Ore =13, T/C =54, Period =12, Bauxite =1, total =85.  This weeks report has only 4 days of data hence less reading of the tea leaves.  Period activity is pretty strong suggesting the players feel rates will stay around current levels thru the next four months.

            Best Done Period vs. spot

Capes:  Navios Stellar          1 yr                    $12,250 vs. $  8,769

PMax:  IVS Merlot              4-6 MOS           $17,500 vs. $10,774

SMax:  none reported                                                  vs. $11,671

Hsize:  CMB Mae                4-7 MOS            $10,250 vs. $  9,181 

The Vessels: VLOC =0, Capes =25, Post P =3, Kmax =8, PMax =36, SMax =10, HMax =0,

Hsize =1, Bulker =2, total =85.

The Futures: 

                              Capes          PMax         Supra         Hsize

Spot                     8,769           10,774        11,671        9,181

CAL13              14,000             9,750        10,000        8,500

CAL14              16,000           11,000        11,500        8,750

CAL14              17,000           12,000        12,000        9,750

Ski Notes:  The following “familiar” vessels populated the fixture reports;  Proteus,Navios Stellar, Ocean Dragon, Navios Felecity, Ocean Confidence, Genco Challenger, Golden Enterprise, Golden Zhejiang. 

The EGLE is...errrr...landing...?

Ref EGLE - yahoo message board poster "tencjedd" - who seems more knowledgable than most - points out the DB note on EGLE this morning:

Despite Losses in 2011, Executive Compensation Reaches 10% Of Market Cap

At the end of 2011, EGLE had full year 2011 GAAP EPS losses of $0.24/share and a market capitalization of $59.4 million. According to EGLE’s April 30 proxy statement, the company paid its three executive officers a total of $5.7 million, or 9.6% of its market cap at 12/31. Cash compensation (calculated as salary and bonus) was $4.3 million, or 7.2% of its market cap. EGLE continues to pay its board and three executive officers’ substantial cash pay (above its larger peers) despite the company’s losses and risk of insolvency. Just the cash component of EGLE’s executive pay from 2008-2011 ($32.4 million) would cover the July 31 debt payment.

Mike Webber at Wells Fargo has also issued a morning note on EGLE...and comments, among other things..."

We reiterate our Underperform rating, as we continue to expect the weak dry bulk market and EGLE's ongoing restructuring discussions to weigh on the stock. We are revising our 2012 and 2013 EPS estimates to -$1.43 (from -$0.70) and -$1.03 (from -$0.15) to reflect the reverse stock split, the Q1 results, as well as revised revenue and expense estimates."

Dry Bulk Update 11 May 2012

Physical:  Capes down a hundo to 8660 and PMs lose more than 2 hundo to 10550.  Supras lose about 50 to 11600.  Broker reports seems to be replete with "quiet", "slowing" and "softer".  Doesnt mean we are going to zero...only means the recent rally can be confirmed as "stopped in its tracks".

FFAs:  Small volume with small volatility.  On the nearby May/June capes down 50, Pms up 200 and Supras unch.  For PMs and Supras - we are looking at a "what you see is what you get" market for the near term...which is expected to slowly decline throughout the year.  It's hard to have a banner year of earnings when the market is facing another year of double digit fleet growth.  The good news for Capes is that they are expected to increase from today's $8,800 level to almost $15,000 by the end of the year...though that brings minimal solace to those with breaj even costs above that level.

Dry Bulk Morning Update May 10 2012

Physical:  The market seems to be losing steam, with Capes and PMs down - and the smaller classes up less than 50 each.  Capes are down 85 to about 8750 while PMs have lost more than 300 to 10800.  SM up a touch to 11670.

FFAs:  Though Capes opened lower, buyers came in to push the nearby up 200 to 9650.  On the same nearby, PMs are down 300 to an even 10k, while Supras loase about a hundo to 10600.