Memorial Day

All gave some,

some gave all

Physical Update

The big ships are down about 300 each while the smaller ships down about a hundo each. Today is not the day the market shifts to the upside.

Message Board - Let's get a little action

We are going to try the message board concept on TMT.  I have no idea where this headed.  But between spam - and total idiot posters - I would like to try something new.  The format may or not be conducive to the end goal, but I think its worth a try.  For me, deleting this page is a 45 second process should it turn out to be a waste of my time and yours.

I opted to start with an EGLE board.  Seems to be where the action is.  It's all about having action.  "You got any action on the game?"  "Yeh - a little action is a good thing."

We can take this many different directions.  Maybe a Dry board and a Tanker board.  Maybe some names get their own board, while others dont.  I really dont know.  What I do know is that its worth a shot.

Input is welcome.  Remember the goal:  become more informed by informing others along the way.  And for good order - idiots are welcome.  It's total idiots I would prefer be jettisoned.  A simple idiot repeats the same argument in the face of informed arguments in the other direction...while a total idiot says, "Buy now, or your marriage counselor will tell your wife its not a big deal if she passes out in front of the children."  No one wants that, believe me.

So - total idiots and spam go the way of the betamax - and simple idiots are a necessary ingredient to success.  Keep in mind, we need to know what they are saying.  How many times have you seen a shipping name bounce 15% in a day - for effectively no reason?  And of course you say, "Who the hell is buying this crap?"  Well - sometimes it helps to know why.

Remember - there is a always a reason something moves.  Always.  But - you need to decide if the reason is valid or not.  Sometime these boards can help us determine what the goats are thinking. 

And with this said - to avoid sounding arrogant with my comments on goat nation:  When you find yourself complaining to any poor soul dumb enough to remain within continuous earshot that the goats are driving share price to ridiculous levels - you yourself might indeed be the goat.  Said differently in many trading books, "If you dont know who the goat is, it's you".

Cheers.

Dry Bits Week 21

Top & Bottom 5 Day:  SFL @16.45 (+32.12%), NMM @13.91 (+20.01%), NM @3.84 (+20.00%) >>> EGLE @3.69 (-3.90%), FREE @0.63 (-7.35%), EXM @ 0.89 (-19.09%).  The top dog this week Ship Finance International Lmtd. ( SFL) made headlines this week restoring the divvy up to double digit yields.  Folks like double digit yields.  The Navios Group grabs the rest of the top slots gaining 20% each.  Perhaps the ringing endorsements AF received here on the TMT….. anyhow on the flip side the laggards held no real suprises. 

The Baltic Exchange:  BDI =1034 down -9.37%, BCI =1424 down -12.79%, BPI =1083 down big -17.34%, BSI =1118 up 0.90%, BHSI =651 up a monster 1.87%. 

The Fixtures:  Coal =4, Ore =4, T/C =41, Period =11, total =60.  Thinking to myself as this week closed I do not ever recall seeing more period activity in a 5 day week than ore chores and coal runs together.  Unreal..and kinda.well.. ..troubling

            Best done period vs. spot

Capes:  none  zip  notta

Pmax:  Shang Dong              4-6 MOS         $11,000 vs.  $9,696

Smax:  Chang Hang              3-5 MOS         $18,500 vs. $11,751

Hmax:  none reported

The Vessels:  VLOC =0, Capes =5, PostP =4, Kmax =6, Pmax =24, Smax =14, Hmax =1, Hsize =4, Bulkers =2, total =60.  When only 5 capes found work during the week it is a wonder the index was not further depressed.  The workhorse panamax fleet not even showing half of the benchmark 50.  Bummer….

The Futures:               

                       Capes              Pmax              Smax               Hsize

Spot                 6847                9010                11751              9696

CAL13            12500              9000                9500                8500

CAL14            15250              11000              10750              8750

CAL15            16750              12500              11750              9750

Ski Notes:  I hope someone from Illinois Marine Towing gets wind of this and passes it along to the boss.  It has been about a month now since I applied for employment in the capacity of Barge Dispatcher for this local barge company.  I even went to the extended effort of including a cover letter letting them know its me…Dry Bulk Dave…, anyhow time goes by and nothing…no call, no letter thanking me…nothing.  Well fellas, that was your bad cause now I withdraw my interest.  Aint you bumming, boy.

Good Fortunes

Dave

Dry Bulk Update

Physical:  It appears the Cape market was able to get the lid back on the can of whoopass that had been opened on it yesterday...as Capes have only fallen 421 today to sit at about the 6400 level.  PMs have also fallen about 400 - and now sit at the 8600 level.  Supras down 50, while Handys up a smidge.

All told - with what we are reading about a global slowdown...dry bulk has some major headwinds.

FFAs:  Though we know futures prices cant go to zero - Rocco suggests that is indeed where they are headed for the Cape sector.  Sarcasm aside, Capes have lost another 300 on the June - and now sit at 7400.  Capes have also lost about 300-400 on the Q3 and Q4, which are now priced at 9300 and 12600.  Better...but there are a few shipowners who will no longer be shipowners if this curve is accurate.

PMs and Supras flat.  On the nearby, they are priced 7700 and 9700 - both backwardated by one or thwo thousand...suggesting the indices should continue to slide.

Ag Clip

Ahoy,

A bit of ag news from our buds at the usda.

During the week ending May 17, 30 ocean-going grain vessels were loaded in the Gulf, down 3 percent from the same period last year.  Thirty-six vessels are expected to be loaded within the next 10 days, 14 percent less than the same period last year.  During the week ending May 18, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $51 per mt, up 2 percent from the previous week.  The cost of shipping from the Pacific Northwest to Japan was $26.50 per mt, unchanged from the previous week. 

Our regular readers know I have been looking at vessel values compared to company carrying values and we have now started work on NMM.  This is not because I think NMM will need to liquidate its vessels anytime soon, because I do not.  But it is a bit telling (to me) about a company’s management and transparency.  Several of our knowledgeable readers have weighed in on the subject with discussions about the CEO of NMM, the value of the charters, the structure of an MLP then applied that to a shipping industry, and I heard a fancy bit about structured finance.  All this is sometimes Greek to me, but interesting.

Let me say the content, texture, and scope of the TMT reader comments is a source of pride among the TMT editorial staff.  We really like that some of our readers are very well informed on this biz, and that they occasionally share what they are thinking with our entire reader base.   We encourage even more reader participation and look forward to the discussions.  My goal is to stimulate some of those discussions.  The cool thing, and I am not bragging… but if you knew some of the people I have met (at least electronically) over the last 3 or 4 years as an editor here on TMT you would think somehow I was a part of the dry bulk business.  That is why it is a bonus for me that informed folks like you take the time to even correct me. The fact that in addition we have regular readers who are also learning daily from reading TMT is the real gig here.  Regular folks like me who enjoy learning the biz and perhaps even investing a bit.  

Good Fortunes

Dave

FFA Closing Report

From Rocco's closing note:  Continued weaker across the curve on all asset classes on very good volume.

Dennis the Menace Gartman - When Genius Flailed

As part of the blog service I get from Squarespace - I get to see exactly what Google searches people performed that directed them to Ton Mile Trader.  The following search, performed yesterday - actually led someone to this blog.  Priceless!

"Does Dennis Gartman make wrong calls on purpose?"

Dry Bulk Update - "Athens, we have a problem..."

Physical: Many of my posts will contain the phrases, "worth noting" and "with that said..." as well as the cyber acronyms, "imho" and "fwiw". 

And with that said - today's acronym for the Cape market is "wtf".  It's down almost $1,100/day to $6,850.  I am still waiting for Dennis The Menace Gartman to step up and take ownership of his bull call in February, though it seems that wont happen.  Nor does it seem any other shillfest participants at Fast Money or CNBC are going to hold him accountable.  Carter Worth could not be reached for comment - though he still gets the spotlight anytime he wants it.  BS.

And for good order - I must repeat my argument here - before Goat Nation starts emailing me, "Hey - we all make bad calls.  What's the big deal?".  My argument has nothing to do with Shill 1 and Shill 2 being wrong.  My argument against them is that the case they spelled out for the reason to buy GNK and dry bulk in general was toooooo flawed.  And more importantly - they have not been called to the floor to explain their disastrous market call.

...but back to the physical:  PMs lose 450 to the 9000 level, while the smaller assets post very small gains.  The Supra class is the breadwinner of the dry bulk family - with average spot rates at $11,750.  Hip Hip!!!!!

FFAs:  Moderate volume.  On the June contract, Capes -175 to 8100, PMs down 300 to 7900 and Supras down 150 to 9800.

NMM fleet valuation

Ahoy there,

I am working on a NMM fleet valuation and came across some conflicting data.  I had seen some of it reported on Tradewinds earlier.  I must admit (with some prejudice) I have long suspected Angel invented NMM for the simple reason of shielding NM Holdings from the price she paid for some of the vessels.  Of course this is not considering how Angelica prospers from all purchases and sales of vessels.  The owner will benefit from theses asset plays thru commissions.  !

Lets see how it might play

1. buy a ship at lets say for 100M  give the boss 5% or so in commissions.
2. Add a extended charter and sell the same ship for 125M to your own drop down company and give the same boss 5% or so commission. 
3. A few years later realize the market value of the vessel is only worth 40M,  impair the vessel at market value, then sell it.  Of course we will give the same boss another 5% or so in commisions.  

Remember that 5% of 100M equalls 5 Million Dollars.  Nice work Angel darling.

Good Fortunes

Dave

reader comment

Hey Dave,
I think your criticism of Angeliki is a bit misguided. Of all the crooked people in the industry, I personally dont think she is one. Navios Group are probably the most transparent publicly listed shipping stocks. NMM is a semi complicated but genius example of structured finance. To simply draw it down to fleet value is foolish. Its structured as an MLP, it is built in a way to to have predictible free cash flow and it does that very well. Valuing the fleet bare bone is certainly valuable, but on a structure like NMM if you dont value the charters attached you are wasting your time. Lets say NM orders a new build cape in 2007, immediatly get a 10 year time charter at $45k a day, then get double AA insurance on the revenue stream, then monetizes that structured product in 2009 upin delivery by raising equity through the MLP, NMM. That revenue stream is going to be worth more than the ship itself. I understand it is more complicated to analayze the cash flow, but atleast say to be fair that the charters add significant value and would need to be considered to get a fair and logical value.

Wed, May 23, 2012 at 11:16 | Pete