$6.03
-0.03 (-0.50%)
Navios Maritime Holdings, Inc. (NM)
CAPS Rating:
A maritime enterprise and operates a fleet of owned Ultra Handymax and Panamax vessels and a fleet of time chartered Panamax and Ultra Handymax vessels that are employed to provide transportation of bulk commodities.
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On May 15, 2009 at 8:39 AM, EggplantWizard (99.82) wrote:
I could have waited for the pullback that I expect to see to make it, but I'm not terribly worried about that as a 3 year pick.
I was planning on holding off in my personal account for similar reasons, but I thought that I may as well go ahead and make the pick right away.
As a disclosure, I have a holding in Navios that represents approximately 1.2% of my net worth at this time. (I'd rather not say how many shares, exactly)
Here's the pitch:
Navios sports an attractive quick and current ratio in this highly leveraged industry. Many, many dry-ship companies are likely do go bust over the next 2-3 years due to a combination of leverage and fraud, but this company has convinced me that it has avoided both.
(Watch them pull a Satyam and make me look like a fool, now )
In any case, they have a fleet with relatively staggered age and a proven ability to source inexpensive additional charters from competitors to close deals, and an extremely solid opportunity to pick up business (and ships?) from underfunded competitors as this global slump lasts longer than anticipated and fraudulent or over leveraged competitors go bust.
I do not believe Navios is the best managed company in the drybulk shipping sector, leaving that honor to DSX, however, Navios has a lot more upside "room to run", if you will. DSX already trades at a premium price (comparitively) to earnings, sales and book. I'm pretty confident there will be a pullback from these prices near four -- possibly as low as $2 again, so if you're a "time the market" type, you might want to hold off on this one a little longer... But as a long term pick, I think Navios will significantly outperform the market over the next three years as we see a mix of a *slowwwwww* economic recovery boosting the baltic dry index (shipping rates), and reduced competition in this sphere due to competitor bankruptcies creating additional opportunities for Navios.
I don't see a solid reason for it to be trading at half of its book value, and though I'm waiting for a much lower price ($2s), betting on irrationality of investors to add more to my real life position, I may as well toss a 2-4 year time horizon-pick out there now.
I purchased at $1.75 and $ 2.15. The stock is at $5.45. The most the stock valued was $14. AllStar the question that I have is when do you believe this would be good to get out of. The trend was upward at $14 before the market went south. Do you believe it will get back to $10 to $12 in the next year to year and half.
I am the original picker -- a lot depends on the relative (nominal) value of the dollar, and how the recovery takes shape.
Also, this is a risky pick -- as while I am confident about NM, there are a lot of fraudulent companies in this sphere, and that may drag on the stock price depending on how future events play out.
Conservatively, I wouldn't be looking to exit any time before $10 / share (personally), though this is my opinion, not investment advice.
Realistically, there is only so much that this company can expand, if we were using constant dollars, and presuming a relatively U-shaped recovery, which I think is unlikely, this should be steady in the mid teens and possibly pop to $20ish?
Who knows -- all I know is a good competitive position and a good balance sheet in a leading and important industry, despite the risks.
I'm likely out in the $11-12ish (2009 dollars) range, but I fully expect that it could halve or bust before it reaches that point, and there are a whole series of future events that could sour me on the company, or make me more enthusiastic. In any case, that's the best I can answer your question.
Egg
What do you think about VLCCF.
I thought you might have good insight in the sector.
Eggplant I am curious as to why you like NM more than some other better looking (balance sheet wise) water transportation companies such as SBLK and TBSI? Maybe I am missing something?
Rob
kaskoosek,
knightsbridge looks great. good find.
I am curious as to what your name means?
This is my other big holding in my personal portfolio (just hit +50% for the year):
Navios Maritime is incredible.
450M market cap
$4.50 price
$220M in cash - $200M available
$1B in debt (sucks but they own 30 ships!)
Year Available Days Contracted Average Daily
Year Fixed Revenue Charter-out Rate
2009 98.0% $250.2 $25,729
2010 77.5% $288.2 $31,415
2011 54.0% $241.1 $36,044
2012 47.6% $225.2 $37,117
From stocki711. his pitch is on his page.
They are guarenteed $225M+ every year!
They have already booked 98% of their revenue days this year!
Stock holder equity is over $800M
Estimated earnings of $0.71 for FY09 and $1.17 for FY10
They have a dividend yield is 5.5% and the payout ratio is 50% (so fairly safe especially with cash pile)
They are a $7 stock this year and $15 by next year. Long term I really like them for growing market share.
They have increased their fleet while others have sold or deactivated theirs.
They have a debt rating of AA+ by the European Union Government Agency
What I'm getting at in this rambling is BUY THEM!