Navios Maritime Holdings, Inc. (NM)

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.

Navios Maritime Holdings, Inc. is a worldwide leader in seaborne shipping, specializing in worldwide carriage, trading, storage and related logistics of international dry bulk cargo transportation. Navios' core fleet consists of 32 vessels, one of the youngest in the industry. The average age of 4.3 years versus an industry average of approximately 15 years. The company owns 10 modern Ultra-Handymax vessels with 4 under long-term charter and holds purchase orders for 9 additional vessels. Navios also owns 6 Panamax vessels with 12 on long-term charter and holds puchase options for 7 vessels.

Navios operates the largest fleet of very modern Ultra Handymax vessels. These trade globally but with a particular focus on commodity movement in the Americas. Each of the vessels has a deadweight tonnage of between 50,000 and 55,000 tons. These vessels are equipped with large-capacity cranes and grabs designed for extra reach and maximum flexibility for customer requirements.

The Panamax fleet is employed in Navios' business around the world, meeting customer requirements and spot market movements. The Panamax vessels have a deadweight tonnage of 70,000 - 83,000 - the cargo base includes iron ore, coal, coke, bauxite, alumina, grain, lead and zinc concentrates and fertilizers.

Navios has extensive experience handling complex freight movements and bulk cargo logistics around the world and in providing innovative solutions for their customers special requirements. Navios owns and operates the largest bulk transfer and storage terminal in Uruguay. Situated in a tax-free, free trade zone in the Port of Nueva Palmira, it operates 24 hours a day, 7 days a week and has a storage capacity of 205,000 tons of grain. The terminal's dock is capable of loading vessels at rates of up to 20,000 tons per day, a second dock is capable of discharging barges at rates of 14,000 tons per day. The economic rationale in creating and launching an independent logistics business port and logistics companies is that it will create shareholder value. Logistics companies trade at a significant premium to traditional shipping companies. Navios Port is not valued at comparable public port multiples.

Navios also provides world wide technical ship management. These include technical, operations, maintenance, security and safety, environmental protection, purchasing and crew activities. Navios ensures that all vessels under its management comply with standards higher than mandated by international and local rules and regulations.

Navios also conducts risk management for other vessel owners and operators. This expetise extends to vessel, cargo and fuel hedging strategies. The company has an excellent loss prevention record which strengthens its insurance terms.

There is a healthy demand for sustained high world seaborne trade growth. Dry cargo trade should increase to 93 metric tons in 2006 compared to 2005. Navios' order book includes 66.9 mdwt (19% of fleet) of scheduled deliveries through 2008 and beyond.

In 2006 secured employment is 87.6% of available days fixed, equivalent to $138.2 million in revenue. The average daily chater-out rate is $17,242.

In 2007 secured employment is 24% of available days fixed, which is equivelant to $43.2 million in revenue. The average daily charter-out rate is $17,434. Navios has signed important long-term contracts with Archer Daniels Midland, Cargill and Louis Dreyfus.

Navios was formerly known as Nautilus Maritime Holdings, Inc. On August 25, 2005 International Shipping Enterprises, Inc. acquired Navios.

Financials for Navios include,

$24.6 million EBITDA Q1 2006 - 67.5% growth compared with Q1 2005
Quartely didvidend $0.0666 per share
$209.71 million reserve
Yearly 2005 EBITDA $88.82 million
Trailing P/E 7.78
Forward P/E 4.71 fye December 2007
Total Debt $560.71 million.

The price is right for Navios!

1. Earnings better than expected
2. Valued slightly above book value
3. Demand for dry shipping is rising
4. Low P/E
5. Low PEG
6. Debt is very real but is being managed appropriately
7. Dividend is currently valued above 3%
8. Very good medium cap stock, This company will hit the 2billion mark within 3 years

This company has been fluctuating recently, which may help the short term investor, long term investors can witness their position doubling late next year.

One very important note about this company is that it is part of the new SEA ETF, which will bring in more investors.

SEA has NM as the 2nd top holding at 4.21%.

SEA is comprised of 30 securities, with a weighted average market cap of 2.9 billion and a weighted average P/E of 10.3. Popular names in the fund include such global shipping players as DRYSHIPS INC (NasdaqGS: DRYS - News) (2.48 %), FRONTLINE LTD (NYSE: FRO - News) (3.91 %), EUROSEAS LTD (NasdaqGS: ESEA - News) (4.57 %), NAVIOS MARITIME HOLDINGS (NYSE: NM - News) (4.21 %), and DIANA SHIPPING INC (NYSE: DSX - News) (4.09 %). The fund also sports a very low expense cap of .65 percent. The top country weightings of the index are Greece – 35.3% (surprise, surprise), USA �- 19.08%, Bermuda – 15.37 % and Bahamas - 10.09%. The fund will also distribute a dividend( if there is any) on a quarterly basis.

Family owned Greek shipping company with high insider ownership percentage almost guarantees consistant dividend payout. At current dividend rate you are making near a 10% return on investment during the first year of ownership if the stock and dividend rate remains at it's current level. The stock has been beaten down along with many other dry-bulk shipping companies but Navios sports a backlog of leased vessels well into 2010.

Growing countries like China and India are demanding large quantities of recourses to help expand their infrastructures. Since China and India do not have all of the materials they need, they will need to get it from somewhere. However, it is not where they get it that is important to this company, it is the fact that these materials need to be shipped and Navios is in the business of shipping. How Convenient!

Not only is there large earnings growth ahead Navios those future earnings come at a deep discount. The stock is down 40% from its high set in October of last year. It has a forward PE of 7.8 and analysts expect the company's earnings to grow 66% per year for the next five years, which gives it a very low PEG of 0.15. Add a nice 2.8% dividend, and this company becomes a recipe for long time rewards.

Navios Maritime continues to perform reasonably well against other dry bulk shippers. The market is starting to differentiate between shippers with a good mix of forward contracts, reasonable debt, a balanced dividend, (I don't believe in borrowing to pay a dividend as some shippers are doing), and cost containment. Their forward contracts are set at well above break even and they can still take advantage of a rising BDI on ships with no forward contracts. It is a reasonable balance. I believe Emerging Markets are starting to rally based on infrastructure plays. They will continue to be dependent on thier "customers" who will remain in recession for another quarter or more, but internal demand will keep the BDI at a profitable level. The 0.06 per quarter dividend continues to be a nice plus while waiting for the shipping industry to recover. It will not achieve the 2007 rates it once had, but the survival of the fittest will reward Navios shareholders over time.

come on!! look at it! ipo- $20, this stock has taken a beaten like all the other dry shipping stocks did when they hit the market then they ran up on increased shipping rates. rates have leveled out and now it's NM's turn to take a good run. this is no DRYS but it is a well managed comp that has current contracts well below value. hold through the bumps. this time next yr will be @ 30 easily. i was lucky to get this at 11.7

EggplantWizard - http://caps.fool.com/player/eggplantwizard.aspx

Navios Maritime is a major dry bulk shipper that has a large fleet of "young" ships (average age about four years). As of today, it is listed on the NYSE. It has great cash flow which is very stable due to long term contracts. Much of its shipping brings raw materials to China. I expect this company to more than double with in the next 2 years.

The weak commodity forecasts seemed to have really hurt this security as it has high exposure to maritime iron ore transportation. However, the earnings outlook for the company have in fact not been changed, even though other similar companies have already lowered earnings expectations.

The securities price is currently below the intrinsic value of its fair market value by a wide margin, about 50%. And with a projected 25% increase in earnings over the next 3 to 5 years, it would take a massive slowdown to really effect this companies earning potential in your portfolio. My final analysis is that its a great time to buy. But realize, you may have to wait that 3 to 5 years to make your money.

So enjoy the tax break!

Dirt cheap, buy and hold, way below book, nice dividend whilst ye wait. Oh, and plenty of cash to debt to see them through whatever in the hell happens in the short term....

The chinese steel makers are using up their inventories of iron ores to keep the shipping rates down so they can get a better price on the iron ore. They are bidding on a multibillion dollar contract with the australi mining giants. However, they are not going to last long, China is the fast growing economy in the world, they are the iron ore hungry giant. i am confident that the baltic dry index will bounce back to 11039 when the contract expires in April. high demand, low supply is going to push the shipping rates higher, only way to transport these valuable commodities such as iron ore is by shipping them. we talking 100,000-200,000 DWTs. can't fly it in the air right? exactly, too heavy...get the picture yet??? navios' Not only going to benefit from high demand in iron ore, but also from corn, bricks, sugar ...etc....shipments. revenues for navios will explode in 08'. Forward P/E is around 6.2, (price of the stock divide by the estimated earners for 2008) which makes this company extremely undervalued. Stock's goiing to out perform the market this year.

I think they are a conservative company, and as such have little downside. I personally got in at $2.48, but sold about 75% when it was about $4.50 ; only because I saw so many other goodies in the candy store that I wanted. In the long run, (2-3 years), which is where most of my portfolio is concentrated ( I am long on all my picks-with real money), they will do great. Right now, because of their size, and lack of previous notice, they tend to get lumped in with whatever is happening in the dry bulk sector. If and when they start getting enough following for what they themselves have to offer, they will pay off well. Not a "Rocket" like Dry Ships, but not as likely to explode either. They have a really "first class" team running this company. They also stand to gain from their SA operations if China decides to "cozy up" to Brazil for future iron ore purchases. As strange as it seems, it is cheaper for China to buy their ore outside and pay to ship it, then it is to provide it domestically. It will take some time, but when the world economy gets back to a more normalized configuration, NM will be in a position to profit because they are laying a strong, diversified base to operate from. In the mean time, they pay a good dividend (especially if you got in or get in low), and still have good upside potential for both the intermediate and longer term. JMO and worth exactly what I am charging for it.

Drybulk has been a spectacular sector in the past year due to higher shipping rates and high demand for drybulk carriers. Out of all the dryships DRYS has been the outperformer but I believe that Navios is a well run company at a reasonable price and will continue its bullish trend.

Easily will outperform over the next two years, they have a good P/E great Growth and less name recognition than say DRYS which could help us see more upside

This world wide mess is temporary. A fleet of mdern ships and good management will bring these guys out the other side. Plus, I think some governments just dropped a couple trillion in to the world economy. I think most of it will end up in the stock markets in the next two years. Once the bailout moneyget through the system, it will end up in quality run companies delivering goods and services to a starved consumer driven nation. It looks like they are already preparing to hunker down for the short term.

I just saw this for the first time today and I have been watching QMAR and DRYS for quite some time now. I so wish I would have caught this a few months ago. I just tossed about $6100 into this one. Still plenty more room to grow!!!!

the fundamentals are looking good here, and the fact that the industry stands to do well with increasing demand bodes well for this carrier. also, i like that insiders hold fully 23% of shares. gives me confidence in the long term outlook for this company.

Think DRYS will perform better, but my sentiment is more towards this one, bought into it at 6% discount Friday, hey... on the 10th anniversary date of black monday, huuuhh...

Company seems well managed and operating efficiently following to the rather complete information you can gather from their website. Some maritime experts seem to like this one too.

Have a good sentiment for the next 3 months. Should be over 20 by year end.