Frontline Ltd. (USA) (NYSE:FRO)

CAPS Rating: 2 out of 5

The Company is a Bermuda based shipping company engaged primarily in the ownership and operation of oil tankers, including oil/bulk/ore carriers.

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Member Avatar pchop12316 (75.99) Submitted: 12/20/2014 11:42:40 AM : Underperform Start Price: $2.71 FRO Score: +10.83

short term profit taking advised

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Member Avatar jed71 (88.74) Submitted: 12/19/2014 12:09:22 PM : Underperform Start Price: $2.52 FRO Score: +4.18

I’ve never thought that shrinking revenue and booking massive GAAP losses has been a winning formula for a company, but what do I know. This company seems to have become the poster child of “sell off assets at the expense of revenue growth” and I am not sure their timing could have been any worse. The oil tanker market has picked up somewhat with the huge decline in oil prices, but I don’t think it’s going to be enough to save this firm.

Brief description of the firm:

“Frontline Ltd. (the "Company" or "Frontline") is an international shipping company incorporated in Bermuda as an exempted company under the Bermuda Companies Law of 1981 on June 12, 1992. Up to February 2013, the Company was engaged primarily in the operation of oil tankers and oil/bulk/ore, or OBO carriers, which were configured to carry dry cargo. The Company owns and leases these vessels. As of December 31, 2012, all of the Company's OBO capital lease assets have been disposed of except for one OBO capital lease asset which was terminated in March 2013. The Company operates oil tankers of two sizes: VLCCs, which are between 200,000 and 320,000 dwt, and Suezmax tankers, which are vessels between 120,000 and 170,000 dwt. The Company operates through subsidiaries and partnerships located in the Bahamas, Bermuda, the Cayman Islands, India, the Philippines, the Isle of Man, Liberia, Norway, the United Kingdom and Singapore. The Company is also involved in the charter, purchase and sale of vessels.”

So this is an oil tanker company that has been selling its fleet and cancelling leases as fast as it possibly can for the past few years. One more section on reduction of its chartered vessels:

“In July 2014, the Company agreed with Ship Finance to terminate the long term charter parties for the 1999 built VLCCs Front Opalia, Front Comanche and Front Commerce and Ship Finance simultaneously sold the vessels to unrelated third parties. The charter parties for the Front Commerce Front Comanche and Front Opalia terminated on November 4, November 12 and November 19, respectively.”

They obviously will have write-offs involved with reducing the fleet:

“The Company has recorded a vessel impairment loss of $41.5 million in the three months ended September 30, 2014. This loss relates to the VLCCs Front Opalia, Front Commerce, Front Comanche and Ulriken. Impairment losses are taken when events or changes in circumstances occur that cause the Company to believe that future cash flows for an individual vessel will be less than its carrying value and not fully recoverable. In such instances an impairment charge is recognized if the estimate of the undiscounted cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel's carrying amount.”

The company is also converting debt to equity as fast as it possibly can:

“Frontline Ltd. (NYSE:FRO) ("Frontline" or the "Company") today announced that it has entered into a private agreement to exchange $22,500,000 of the outstanding principal amount of the Company's 4.5% Convertible Bond Issue 2010/2015 (the "Bonds") for an aggregate of 3,984,375 shares at an exchange price of $3.12 per share, and a cash payment of $9,562,500 plus accrued interest. In addition, under the exchange agreement, Frontline has agreed to issue, on December 23, 2014, up to an additional 760,377 shares to the holders of the Bonds based on an agreed formula if the 5-day volume-weighted average price (VWAP) of the Company's shares, for the period ending December 22, 2014, is lower than the exchange price, subject to a minimum VWAP price of $2.62 per share.”

It’s important to note the company still has close to $1.2BB in debt with a rapidly shrinking fleet and revenue base. Revenue has declined from $1.1BB in 2009 to an astonishingly low $517MM for fiscal year 2013. Losses continue to pile up with the most recent quarterly loss of ($78MM). Accumulated deficits have grown to reach ($825MM) in the latest quarter with shareholder equity going negative. This looks to be a terrific bankruptcy candidate in 2015 and a good potential short candidate for those with the cahones to do so. AVOID.

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Member Avatar monopole (< 20) Submitted: 11/13/2014 4:48:27 PM : Outperform Start Price: $1.29 FRO Score: +86.59

Oil will be shipped. The more, the cheaper it is.

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Member Avatar karlsmq (< 20) Submitted: 1/17/2014 11:19:38 AM : Outperform Start Price: $4.72 FRO Score: -61.28

AS OIL AND GAS DEMAND SPECIALLY LIQUID GAS DEMAND GROWS FOR TANKER WILL INCREASE.

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Member Avatar urmoney (99.88) Submitted: 1/16/2014 11:52:19 AM : Outperform Start Price: $4.90 FRO Score: -63.17

Very depressed shipping industry over the last 5 years. Rates down, no new ships coming on line, play on the continuing economic recovery and a resultant resurgence in shipping needs to supply building and oil products.

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Member Avatar Haugurafpeningum (28.37) Submitted: 1/15/2014 10:13:53 AM : Outperform Start Price: $4.53 FRO Score: -58.92

BB 8

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Member Avatar MidtrendFool (< 20) Submitted: 10/25/2013 8:18:40 PM : Outperform Start Price: $2.28 FRO Score: -11.55

If they can manage their way out of a huge upcoming debt maturity in 2015... They just converted 10% of the issue to stock, dilutive to shareholders but keeps the company in the game. Think of the cyclical buying cycle of cars (when the average age of a car is approaching 10 years old, car sales will pick up with an improving economy) same goes for these huge ocean going oil tankers except the cycle is a little longer at about 15 years. Buy and hold long term for a 10 bagger!

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Member Avatar rknapton (< 20) Submitted: 8/6/2013 7:35:50 PM : Underperform Start Price: $2.48 FRO Score: +24.82

Short. Dwindling revenues, way to much debt.

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Member Avatar baselineace (< 20) Submitted: 6/18/2013 12:32:45 AM : Outperform Start Price: $2.34 FRO Score: -22.43

No, the world is not ending! And we still use oil, believe it or not!

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Member Avatar anniemac63 (< 20) Submitted: 6/24/2012 9:56:26 PM : Underperform Start Price: $4.15 FRO Score: +98.79

Not as much need for oil transportation

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Member Avatar drcurtis78 (< 20) Submitted: 3/17/2012 9:59:23 PM : Outperform Start Price: $7.64 FRO Score: -116.38

History. Who bet against Scandinavian shippers/traders/warriors and ever won? lmfao, I got it at 3.07$, Wallstreet and the bank analysts can go smoke some more of that stuff.

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Member Avatar eleev (< 20) Submitted: 12/7/2011 2:23:27 PM : Outperform Start Price: $3.66 FRO Score: -98.37

one of largest shipping companies. With economy picking up, fro should improve and pay a good dividend.

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Member Avatar marisacal (< 20) Submitted: 12/6/2011 6:40:22 PM : Outperform Start Price: $4.10 FRO Score: -105.84

becuse own it ,and hope that i am right..

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Member Avatar eramire (< 20) Submitted: 11/25/2011 3:06:23 PM : Outperform Start Price: $2.94 FRO Score: -91.15

Highly volatile but at these prices who can resist .
Not much downside but plenty of room on the upside...I,m in.

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Member Avatar ErokWitus (< 20) Submitted: 10/29/2011 5:01:30 PM : Outperform Start Price: $5.37 FRO Score: -118.14

It is underrated. Once the economy gets better this will shoot up.

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Member Avatar Lawrence56 (< 20) Submitted: 10/13/2011 10:45:10 AM : Outperform Start Price: $5.30 FRO Score: -127.68

If I were building a shipping company, that's where I'd put it.

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Member Avatar arvelm88 (< 20) Submitted: 8/9/2011 9:15:46 PM : Outperform Start Price: $7.41 FRO Score: -147.46

strong company will outlast other tankers in hard times

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Member Avatar beadnell (94.34) Submitted: 8/7/2011 3:45:43 PM : Outperform Start Price: $7.93 FRO Score: -147.06

Tankers - good

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Member Avatar mp102 (30.42) Submitted: 8/4/2011 10:38:13 PM : Outperform Start Price: $9.05 FRO Score: -143.80

see deranged monkey post #11083. c9 said so.

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Member Avatar hmuller77 (< 20) Submitted: 8/3/2011 3:02:23 PM : Underperform Start Price: $9.52 FRO Score: +140.06

paid dividends for many years.I trust the operators to do the right thing

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