Nordic American Tankers Limited (NYSE:NAT)

CAPS Rating: 3 out of 5

The Company was formed for the purpose of acquiring and chartering three Suezmax tankers.


Player Avatar Lordrobot (87.42) Submitted: 10/2/2011 2:26:57 AM : Outperform Start Price: $14.74 NAT Score: -18.17

90% of whether you purchase a tanker depends on several factors:

1) debt NAT has NO DEBT!
2) div 8% presently and paid 56 consecutive quarters
3) expanding by buying discounted ships without dilution
4) Oil is dropping in price. This stimulates Asian stockpiling and offshore storage
5) Oil prices have been in a bubble thanks to Goldman Sachs the largest buyer of oil contracts that never takes delivery. Asia has about had it with Goldman so they stared slowing down in spring when Goldman tied to gouge Japan after the Tsunami. Instead, Asia applied passive aggressive restraints and waited out the markets. China has lots of creative excuses, last month for example they were doing maint. on their refineries. They are now starting to order and Japan alone will cause oil demand in 2012 to increase by 3 mil bblls a day to 91.5 mil bbls a day global demand.
6) The glut of ships is primarily VLCC. But if you read Clarkson's you will find that in Sept 11 week, the Suezmax ave earnings were up 38%, Aframax had an increase in activity, and chem products firm. VLCC flat on tonnage. By the way... ALL of NAT's ships are Suezmax vessels. Sept 11 weekly ave. earnings were up 38%! Suezmax is the sweet zone.
7) But through the magic of numbers, only a 3% increase in global oil demand presently at a six year low, and projected by Japan alone, wipes out the VLCC glut and creates a shortage. If oil drops further then real demand will rise and the VLCC are then used for offshore storage. If you buy into the global recession theme then the oil bubble will collapse but be careful because Asians stockpile so that oil has to come by tanker. Asians deeply resent being ripped off by Goldman for commodities so they have started in the last year to use stockpiles. They do it in oil and they do it in Copper, corn and rice. By the way goldman is using its Fed Reserve Bank cheap money to speculate in commodities instead of lending it to small business at low rates. They have damaged both the US and Euro economies with their bubble oil speculations. That's ending, oil is coming back down to the actual supply demand numbers nearer to 40 a bbl. Nothing stimulates economies like low cost oil and gasoline.
8) NAT has been smashed in the markets and is dirt cheap. Presently there is 9% short interest. The float is a mere 44 million shares!
9) I read that slanderous piece by Anand who is a CFA, his entire argument was based on saying that NAT's div. was causing future dilution. NAT maintains it is cash flow. NAT has done a great job keeping no debt throughout the recession and the Libyan disruption. They have also expanded with two new builds both purchased at a 38% discount. 2012 oil demand in Asia and India will be brisk and the industry will slingshot. In a good oil market, this stock goes to 45. 2012 on out will be very good oil markets.

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