tag:blogger.com,1999:blog-9213538927378012885.post8207898323855008310..comments2021-05-19T06:15:05.274-06:00Comments on Life, Investments & Everything: A Mortgage On Floating Collateral That Yields 13%The Good Soldier Svejkhttp://www.blogger.com/profile/07013339749774124288noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-9213538927378012885.post-36776646006107909082012-03-25T21:36:12.960-06:002012-03-25T21:36:12.960-06:00The bonds are first lien mortgage position. The h...The bonds are first lien mortgage position. The history is that when NNA bought the VLCC fleet the ships came with long term bank financing. When the opportunity arose, NNA issued the bonds and paid off the banks, gving the bondholders first lien mortgage position.<br /><br />Shipping companies are properly valued based on NAV, IMO, although I usually value them on both NAV and EV/EBITDA. The easiest way to look at these companies is to plot out each ship with its own line of the spreadshet and see what different day rates give for annualized EBITDA.The Good Soldier Svejkhttps://www.blogger.com/profile/07013339749774124288noreply@blogger.comtag:blogger.com,1999:blog-9213538927378012885.post-11869194781843019632012-03-25T15:51:38.054-06:002012-03-25T15:51:38.054-06:00Are the bonds first lien against the ships, or doe...Are the bonds first lien against the ships, or does any of the bank debt stand in front of these? I'm surprised the other bank debt and credit lines would agree to subordination. I think it is a great find if these are first lien.<br /><br />My sense is the equity is trying to make a bottom, although I would like to see it retest around $3. What I like about equity is that management both looks very competent and also has significant ownership stakes in the equity. Both the holding company and the CEO hold significant equity stake in NNA. I like the alignment of interests in the hands of a competent management.<br /><br />How would you value the equity in a recovery? Superficially, if they have about $125M EBITDA out to 2014 and you give that a 10x EBITDA multiple (which is aggressive maybe but would reflect recovery in expectations) you might see 2.5x upside from current equity pricing.<br /><br />If you have a chance could you send me email to persistentone AT spamarrest.com?persistentonehttps://www.blogger.com/profile/04962190758037772672noreply@blogger.comtag:blogger.com,1999:blog-9213538927378012885.post-3439619481840046902012-03-25T10:06:20.767-06:002012-03-25T10:06:20.767-06:00Unlike the bonds, NNA's equity is attractive o...Unlike the bonds, NNA's equity is attractive only if 1) you are willing to bet on management and 2) you believe that the outlook for the product tanker market in the next few years is positive. As far as managemet goes, I have been investing in Ms. Frangou's (Chairman & CEO) companies since 2005. I have spoken to several members of the senior management team upon occasion (they actually set up a brief call to answer my questions after Q4 2011 earnings were out even though I am strictly a retail investor) and I have always been impressed with their acumen and forthrightness. I also take a lot of comfort frm the fact that Ms. Frangou personally owns a large stake in Navios Holdings and substantial stakes in Navios Acquisition and Navios Partners. So I am very comfortable betting on management.<br /><br />The state of the product tanker market is a bit trickier. The orderbook is far more rational than that for dry bulk or crude tankers, which is positive. There are also shifts taking place in the global refining industry which are positive, namely refineries on the US East Coast and Europe shutting down while refining capacity growth is happening mostly in places like China and India (and the Middle East). However, high prices for refined products are depressing products demand and the flow of credit to shipowners is putting pressure on asset prices. All in all, I think that the credit availability and demand destruction issues will sort themselves out sooner rather than later, and I see some of the smartest money in the world (Wilbur Ross and John Fredriksen) jumping into the products sector, so I think the story for the equity is a good one. Risks are obviously higher for the equity than the bonds.<br /><br />I am significantly (for me) long this equity. Most of my position is "house money" since I already made a multi-bagger return on the warrants, cashed in half, and swapped the rest for straight equity when NNA offered investors that opportunity. I think if story pans out positively, NNA would be worth $10 or better per share, but I would expect it to take 3 to 5 years to get there.The Good Soldier Svejkhttps://www.blogger.com/profile/07013339749774124288noreply@blogger.comtag:blogger.com,1999:blog-9213538927378012885.post-14577033797277049272012-03-24T23:43:34.233-06:002012-03-24T23:43:34.233-06:00Well done. I would be interested in your opinion ...Well done. I would be interested in your opinion on the equity as well.persistentonehttps://www.blogger.com/profile/04962190758037772672noreply@blogger.com