Marketplace Roundtable

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Value Investor's Edge Live #43: Flex LNG: Surging Cash Flows And Dividends Aug 12, 2021

Show notes

Oeystein Kalleklev, CEO of Flex LNG (FLNG), a leading ultramodern LNG shipping company, joined J Mintzmyer's Value Investor's Edge Live on June 10, 2021, to discuss the LNG shipping markets and capital allocation priorities for Flex LNG. Flex has set an upsized dividend level of $0.40/qtr and appears set to support this payout, and potentially even higher payouts, due to excellent time charter fixtures. Despite this progress, FLNG still trades at a significant discount to NAV if we utilize newbuild asset parity, which I estimate at nearly $20/sh. This implies over 45% of equity upside in addition to a nearly 12% income yield. FLNG is likely to raise the dividend even further by late 2021!
This interview and discussion of the underlying LNG global markets is relevant for anyone with LNG shipping or LNG export infrastructure investments, including Cheniere (LNG), Cheniere Partners (CQP), GasLog Partners (GLOP), Golar LNG (GLNG), Hoegh LNG Partners (HMLP), Teekay LNG Partners (TGP), and Tellurian (TELL).
Topics Covered
(3:00) What is driving the strength in LNG markets?
(9:00) What is the spread between MEGI/XDF and TFDE rates?
(12:00) Any additional charter coverage planned?
(14:00) Any appetite or opportunity for fleet growth?
(17:30) Potential to increase share purchase authorization levels?
(21:00) Commentary on dividend program and sustainability.
(23:45) What are the primary risks in this market?
(28:00) Any impacts/risk to upcoming regulations? Any benefits?
(33:00) Technical difference between ME-GI, ME-GA, and X-DF designs?
(38:30) Any concern about the LNG orderbook? Qatar orders?
(47:15) Commentary on recent interest rate swap transactions?
(52:30) What differentiates FLNG from peers and other shipping firms?
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Value Investor's Edge Live #42: Tanker Market Updates From Euronav Aug 10, 2021

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Hugo De Stoop, CEO of Euronav (EURN), a leading crude tanker company, joined J Mintzmyer's Value Investor's Edge Live on June 9, 2021, to discuss the crude tanker markets, recovery trajectory, and capital allocation priorities for Euronav. This interview and discussion is relevant for anyone with crude tanker or product tanker investments, including Ardmore Shipping (ASC), Diamond S Shipping (DSSI), DHT Holdings (DHT), Frontline (FRO), International Seaways (INSW), Navios Maritime Acquisition (NNA), Nordic American Tankers (NAT), Scorpio Tankers (STNG), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP) and Torm (TRMD).
Although it may seem a bit dated since this interview was conducted about two months ago, very little has changed in the crude tanker markets since we last chatted, so the content should be useful for all investors interested in Euronav or the overall sector. It's worth noting that the emergence of the Delta variant has effectively pushed back the crude tanker recovery scenario by at least 2-3 months so far, so even though the big picture situation is similar, the turnaround timing has been pushed back a bit further.
Euronav is set to report Q2-21 results on Thursday, Aug. 12, with a conference call at 0800 EST. This interview should act as a useful primer before these results.
Topics Covered
(2:00) Current state of the crude tanker market? Past the bottom yet?
(5:00) Impact of Iran sanctions coming off soon?
(9:00) Any concerns about the current tanker orderbook?
(13:45) How do current environmental proposals impact EURN?
(19:45) Economics of investing in environmentally friendly upgrades?
(24:00) Are scrubber retrofits attractive here with larger spreads?
(25:45) Environmental impact from copper-oxide hull paints?
(27:30) Will 2023 EEXI impact EURN? Risks of divesting older ships?
(33:45) Any risk of exposure to future ‘green recycling’ requirements?
(36:30) What are Euronav’s current capital allocation priorities?
(41:30) Any plan to address adverse tax-withholding from dividends?
(44:45) Update on ULCC assets?
(47:00) Commentary on FSO JV? Any divestment potential?
(50:30) Why invest in EURN versus peers? Differentiation?
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Value Investor's Edge Live #41: Market Insights From MPC Container Ships Aug 06, 2021

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Constantin Baack, CEO of MPC Containers (OTCPK:MPZZF), a leading small-sized containership lessor, joined J Mintzmyer's Value Investor's Edge Live in June 2021 to discuss the surging containership markets and company strategy to benefit from these elevated market levels.
Although MPCC is not currently listed in the US markets, there's sufficient trading liquidity on the Oslo Exchange under the stock symbol "MPCC" and they're considering a potential US-listing if market conditions remain favorable and their market capitalization exceeds $1B.
For more particular information on MPC Containers, I highly recommend reviewing their latest investor presentation, which was updated on June 22. MPCC is set to publish Q2-21 earnings results on Aug. 19.
For readers and listeners primarily interested in US-listed names, the primary comps include Atlas Corp. (ATCO), Costamare (CMRE), Danaos Corp (DAC), Euroseas (ESEA), Global Ship Lease (GSL), and Navios Maritime Partners (NMM). Included market content should be relevant for investors in all of these names.
Topics Covered
(1:45) What is primarily driving the market strength? How long can it last?
(4:15) What are the primary risks for investors to watch?
(10:45) How large is the discount for 2-3 year charters versus 1y quotes?
(12:45) The Harpex index is due for a massive upward revision?!
(15:15) How far in advance are you fixing your vessels?
(18:00) Are there any opportunities to acquire more secondhand tonnage?
(21:00) Any clear negatives to recent containership transactions?
(23:45) Plans for a dividend? Expected timeline for first payout?
(26:15) Current economics for newbuild tonnage for feeders/midsize?
(30:30) Upcoming impact from 2023 EEXI and/or bunker fuel tax?
(34:30) Any impact/concern due to the increased focus on ‘green recycling?’
(37:15) Current economics from scrubbers? Any plans to add more?
(41:15) What differentiates MPCC? Why choose this stock over others?
(44:00) Future plans for a US listing?
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Value Investor's Edge Live #40: Dorian LPG: Surging Returns To Shareholders Jul 29, 2021

Show notes

Ted Young, CFO of Dorian LPG (LPG), joined J Mintzmyer's Value Investor's Edge Live on June 11, 2021, to discuss the LPG shipping markets and specific company prospects and capital allocation potentials. This interview and discussion is relevant for anyone with LPG sector investments, including Avance Gas (OTCPK:AVACF), BW LPG (OTCPK:BWLLF), Navigator Holdings (NVGS), and Stealth Gas (GASS).
Topics Covered
(1:45) Overview of the current and mid-term LPG markets.
(7:00) Any concern about the increasing VLGC orderbook?
(9:45) Discussion about impending environmental regulations.
(11:15) Interest in LPG dual-fuel retrofits? Economics?
(15:30) Are rising steel prices impacting newbuild costs?
(19:30) Will US LPG production, inventory, and export levels improve?
(22:30) Update on scrubber program economics.
(24:15) Are you interested in divesting the oldest 3 vessels?
(26:45) Views on target leverage and minimum cash balance?
(30:15) Appetite for more repurchases? Tender offer?
(31:30) Any concern about share liquidity?
(34:45) Potential for a new repurchase authorization?
(35:45) Any additional impact from EEXI or other initiatives?
(40:30) Any impact from the removal of Iran sanctions?
(42:30) Impact from more OPEC oil and NGL exports?
(45:00) Potential for a dividend? Structure? Special vs. regular?
(49:15) Why choose Dorian over other VLGC peers?
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Value Investor's Edge Live #39: Dry Bulk Cash Machine - Genco Shipping Update Jul 27, 2021

Show notes

John Wobbensmith, CEO of Genco Shipping (GNK), a dry bulk shipping company, joined J Mintzmyer's Value Investor's Edge Live on 25 June 2021 to discuss the strong market outlook and company specific plans for capital allocation and shareholder returns.
GNK is benefiting from surging rates and is expected to report a strong Q2 earnings report followed by an even stronger showing in Q3. Although market conditions can change and dry bulk is notoriously volatile, the supply side is the most bullish we have seen in 20-plus years and the signals from demand are also encouraging, particularly in the midsize and smaller segments, which are reviewed in detail in this update.
Perhaps of most interest to shareholders is Genco's plan to begin massive dividend payouts once target leverage is achieved. GNK's officially stated plan is to begin these large payouts after Q4-2021 results (i.e. in early-2022). However, market conditions have been very strong, so there's a potential for GNK to start to move even faster. With current market rates and GNK's stated dividend policy, we could theoretically see yields of 30% or higher against current share prices.
This interview contains relevant insights for investors in all other dry bulk companies, including 2020 Bulkers (Oslo: 2020), Diana Shipping (DSX), Eagle Bulk (EGLE), Eurodry (EDRY), Golden Ocean (GOGL), Grindrod Shipping (GRIN), Navios Partners (NMM), Pangaea Logistics (PANL), Safe Bulkers (SB), Seanergy Maritime (SHIP), and Star Bulk Carriers (SBLK).
Topics Covered
(2:00) Dry bulk market overview
(8:00) Differences between midsize and Capesize markets?
(12:30) Any clear impact from upcoming environmental regulations?
(15:45) Views on ammonia or LNG-dual fuel designs?
(17:15) Any interest in newbuild assets or resale tonnage?
(19:15) Any other growth potential?
(22:30) Potential to raise the dividend sooner due to strong markets?
(25:15) Dividend structure? Potential to pay even in weak markets?
(27:45) Views on low leverage? Optionality to increase it?
(30:15) Any desire to add time-charter coverage in this market?
(32:00) Review of scrubber program and economics.
(34:30) Why choose Genco Shipping (GNK) as the favored dry bulk play?
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Value Investor's Edge Live #38: Global Ship Lease: Racking Up Container Profits Jul 13, 2021

Show notes

The CEO and CCO of Global Ship Lease (GSL), Ian Webber and Tom Lister, joined J Mintzmyer's Value Investor's Edge Live on 11 June, 2021, to discuss the containership transport markets and forward opportunities in the markets. We also covered GSL's major acquisition of 12 containerships, which took place in early June. GSL guided for at least $1.09 in annualized EPS contribution from this latest purchase. However, with containership rates continuing to surge, I suspect GSL guided too low on the first deal and I would anticipate a minimum of $1.50 in annualized earnings contribution from those ships once they are fully delivered by the end of Q3 2021.
This interview and discussion of the underlying containership markets is relevant for anyone with interest in GSL or in related containership shipping companies, including Atlas Corp (ATCO), Capital Partners (CPLP), Costamare (CMRE), Danaos Corp (DAC), Euroseas (ESEA), Matson (MATX), MPC Containers (OTCPK:MPZZF), Navios Partners (NMM), SFL Corp (SFL), and Zim Integrated Shipping (ZIM).
Surging Containership RatesContainership leasing rates have been on a surge over the past year and we have seen subsequent all-time record highs set for each of the past six weeks. The latest Harpex Index is shown below, which reflects the benchmark rates for one-year charters:
Source: Harper Petersen, Harpex Index, 5-Year Chart
Massive Earnings Growth, Stock Stuck in Neutral?Subsequent to this interview (which was conducted on 11 June), Global Ship Lease announced yet another vessel acquisition deal on 16 June, which added four more vessels to their fleet. GSL anticipates the four latest ships will add an additional $0.88 in annual EPS, which is in addition to the $1.09 they guided from the first major acquisition in early June (but I expect closer to $1.50 contribution). Altogether, these latest two deals in June alone should add up to $2.40/sh in annualized earnings potential on top of GSL's organic fleet contribution levels.
However, despite this fleet and earnings growth, GSL stock has been stuck in neutral over the past six months, up just 15% since January and down more than 20% from peaks in mid-June. This may present a phenomenal opportunity for investors who are interested in this sector, but either way, I hope the interview will help add additional color about this firm.
Source: Google Finance, GSL 6-month chart, 8 July 2021
Topics Covered
(2:00) What is driving the surge in rates, how sustainable are they?
(6:30) What charter durations are preferable? Discount rates?
(9:00) Any potential for forward fixtures into 2022?
(12:30) What assumptions play into the economics of the new purchase?
(18:45) Target leverage for the latest acquisition?
(20:45) Any appetite for further vessel acquisition deals?
(24:00) Not many public company buyers… Private asset buyers?
(26:30) Split between charter-free values and charter discounts?
(30:15) Economic tradeoff between secondhand and newbuilds?
(33:00) Do smaller and midsize ships play a viable role in the future?
(38:15) Will environmental regulations threaten middleaged tonnage?
(47:45) What is your target balance sheet leverage?
(51:00) GSL has a higher average cost of debt: savings potential?
(55:30) Any appetite for more preferred equity?
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Value Investor's Edge Live #37: Midsize Dry Bulk Surge: Insights From Eagle Bulk Jul 01, 2021

Show notes

Gary Vogel, CEO of Eagle Bulk Shipping (EGLE), a dry bulk shipping company focused on the mid-sized segments, joined J Mintzmyer's Value Investor's Edge Live on 9 June 2021 to discuss the rapidly improving market outlook and company specific plans.
EGLE is benefiting from surging rates and is expected to report a blow out Q2 earnings report followed by an even stronger showing in Q3. Although market conditions can change and dry bulk is notoriously volatile, the supply side is the most bullish we have seen in 20+ years and the signals from demand are also encouraging. Gary talks through the markets in our interview as well as about capital allocation specifics and strategy for Eagle Bulk in particular.
This interview contains relevant insights for investors in all other dry bulk companies, including: 2020 Bulkers (Oslo: 2020), Diana Shipping (DSX), Eagle Bulk (EGLE), Eurodry (EDRY) Genco Shipping (GNK), Golden Ocean (GOGL), Grindrod Shipping (GRIN), Navios Partners (NMM), Pangaea Logistics (PANL), Safe Bulkers (SB), Seanergy Maritime (SHIP), and Star Bulk Carriers (SBLK).
Topics Covered
(0:00) Introductions and disclosures
(1:40) What is driving the steady strength in midsize dry bulk markets?
(4:15) What is the impact of the Australia-China coal shifts?
(5:30) Why are Capesizes far more volatile at this time?
(7:15) Why are 2022 FFAs still considerably below current market levels?
(9:30) Any activity or inquiries in the longer-term charter market?
(12:15) Discussion on rate hedging via derivatives.
(13:45) Capital allocation priorities? Target leverage?
(16:30) Commentary on ATM facility? Usage here?
(19:00) Potential for a dividend policy/program?
(21:00) Improving share liquidity? Lack of options trading?
(23:00) Potential for further sector consolidation?
(24:45) Impact from EEXI or tonnage tax?
(28:30) Current scrubber spreads? Plans to hedge savings?
(32:00) Discussion on proper benchmark for rates.
(34:15) What are the major risk factors at this point?
(38:30) When are potential newbuild yard slots available?
(40:30) Any desire to lock in 1-year rates yet?
(42:30) Why choose to invest in EGLE vs. peers?
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Value Investor's Edge Live #36: Tanker Market Updates With International Seaways Jun 29, 2021

Show notes

Lois Zabrocky and Jeff Pribor, CEO and CFO of International Seaways (INSW), joined J Mintzmyer's Value Investor's Edge Live on June 11, 2021, to discuss the crude and product tanker markets and forward prospects. We also reviewed company-specific plans and capital allocation priorities after they complete the merger with Diamond S Shipping (DSSI). International Seaways will then become one of the largest publicly-traded tanker companies and is poised to increase repurchases as part of a balanced capital allocation program. INSW is also preparing a $1.10/sh special dividend as part of their merger program.
This interview and discussion is relevant for anyone with crude or product tanker investments, including Ardmore Shipping (ASC), DHT Holdings (DHT), Euronav (EURN), Frontline (FRO), Hafnia Tankers (Oslo: HAFNI), Navios Acquisition (NNA), Nordic American Tankers (NAT), Pyxis Tankers (PXS), Scorpio Tankers (STNG), Teekay Tankers (TNK), Torm Plc (TRMD), Tsakos Energy Navigation (TNP), or Okeanis Eco Tankers (Oslo: OET).
Topics Covered
(0:00) Intros/Disclosures
(2:00) Crude tanker market update, are we past the worst?
(6:00) Outlook for product tanker market vs. crude?
(10:30) Potential impact from EEXI and/or bunker tax proposals?
(14:00) Any risks from ‘green recycling’ requirements?
(19:00) Overall commentary on DSSI merger.
(21:15) Why does INSW trade at a massive discount to peers?
(26:45) Potential for repurchase after the DSSI merger closes?
(30:15) Potential for a tender offer?
(32:00) Commentary on future dividend potential/plans?
(34:45) Plans/potential for the FSO joint-venture?
(40:30) Review of the dual-fuel LNG economics.
(49:00) Why buy INSW vs. other tanker peers?
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Value Investor's Edge Live #35: Containership Surge - Update From J Mintzmyer, Interview With Daniel Shvartsman Jun 29, 2021

Show notes

In this special edition of the Marketplace Roundtable, Daniel Shvartsman interviews J Mintzmyer, Head of Research at Value Investor's Edge. J reviews the containership sector, the latest market conditions, and outlines the bullish thesis in the containership sector. The discussion reviews sector dynamics along with several top picks in the sector. The shipping sector is off to a very strong start in 2021, with YTD model portfolio returns of 136.6% (Speculative Plays) and 69.4% (Best Risk/Reward) on J's exclusive research platform: Value Investor's Edge.
Topics Covered
2:30 – Catching up on the containership market
5:30 – The myths around containerships
10:00 – The impact of the underlying ZIM stake on Danaos Corp (DAC)
12:00 – Supply chain gives and takes for the containership sector
17:30 – Not anchoring on the price
19:00 - Why containership stocks don’t directly follow rates
22:30 – Interest rate risk and inflation risk for containership lessors
26:30 – Valuing these companies given the cyclical nature of the business
32:00 – Favorite names for investors and traders
35:00 – Bear case scenarios for containerships
37:30 – Broad review of other shipping segments
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Value Investor's Edge Live #34: Star Bulk Carriers Updates On Surging Bulk Markets Jun 15, 2021

Show notes

Hamish Norton, President of Star Bulk Carriers (SBLK), Co-CFOs Christos Begleris and Simos Spyrou, and SBLK Head of Research Constantinos Simantiras joined J Mintzmyer's Value Investor's Edge Live on June 8, 2021, to discuss the dry bulk markets and forward prospects and capital allocation. Star Bulk Carriers is the largest US-listed dry bulk company with 128 vessels on the water. With rates surging, SBLK is focused on the '2 Ds' of dividends and deleveraging. We expect to see substantial payouts throughout there year.
This interview and discussion is relevant for anyone with dry bulk investments or interest in the overall sector, including Diana Shipping (DSX), Eagle Bulk (EGLE), Eurobulk (EDRY), Genco Shipping (GNK), Grindrod Shipping (GRIN), Golden Ocean (GOGL), Navios Maritime (NM), Navios Maritime Partners (NMM), Pangea Logistics (PANL), Safe Bulkers (SB), Scorpio Bulkers (SALT), and Seanergy Maritime (SHIP).
Topics Covered
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