After what we perceived to be a long absence, we were pleased to see the return of Justin Yagerman at his new desk in Deutsche Bank. Mr. Yagerman leads the transportation and shipping team that includes Robert Salmon and Michael Webber. Coverage includes trucking, airfreight, logistics, railroads and, of course shipping.
On Wednesday, Mr. Yagerman initiated coverage of the sector. His main takeaway on shipping was: “near-term fundamentals challenging across the board, but high quality names should continue to outperform.”
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carisk | Categories:
Freshly Minted,
Market Commentary | October 1st, 2009 |
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It began with the movie “Rashomon” and evolved into a concept. “The Rashomon effect is the effect of the subjectivity of perception on recollection, by which observers of an event are able to produce substantially different but equally plausible accounts of it.” Or as the movie asks, who is telling the truth and what is the truth?
Our version of the script calls for a look at Seaspan’s first quarter earnings announcement to elicit the main takeaways. We then turned to our favorite shipping analysts, including Natasha Boyden of Cantor Fitzgerald, Gregory Lewis of Credit Suisse, Omar Nokta of Dahlman Rose, Douglas Mavrinac of Jefferies, Urs Dür of Lazard and Justin Yagerman of Wachovia, for their views and calls. This becomes a very interesting exercise because, as the analyts tell us, there is no company that is easier to model given their strategy to lock-in costs and fix revenues for the long-term.
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carisk | Categories:
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The Week in Review | April 30th, 2009 |
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Sticking to its roots, Euroseas Ltd., on Monday, announced the continuation of its fleet renewal and expansion program. The company acquired the 1997 built Panamax bulkcarrier, M/V Glorious Wind, on a charter-free basis, for $18.4 million. In addition, Euroseas disclosed the simultaneous sale of the M/V Nikolaos P, a 34,780 DWT bulkcarrier built in 1984 for $2.4 million. The new Panamax will be employed in the spot market and according to Justin Yagerman of Wachovia Capital will be likely be funded from internally generated cash flow including, the sales proceeds. He further suggests that the company will obtain 50% financing at a later date.
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carisk | Categories:
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The Week in Review | February 19th, 2009 |
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The most recent illustration of this phenomenon has come from Seaspan (NYSE:SSW)’s backers. Co-founder Dennis Washington issued a statement saying: “I believe strongly in the financial model of Seaspan Corporation. The Company has a very modern fleet, prestigious customers and a strong management team. The Company is well-positioned to take advantage of opportunities that may arise in the future.” Then he put his money where his mouth is with the announcement of a $200 million issue of preferred equity.
The company last week announced an agreement to issue and sell Series A Preferred Stock to Dennis, Kevin and Kyle Washington and Graham Porter through respective affiliates. Dennis Washington will be investing $140 million and the others an aggregate of $60 million. Continue Reading
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nhuvane2 | Categories:
Asia,
Equity | January 29th, 2009 |
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Moving from the theoretical to the concrete, the following examples illustrate the real cost of today’s crises:
Genco Bites the Bullet
On Tuesday, Genco Shipping & Trading (“Genco”) made the correct but painful decision to cancel the previously announced acquisition of six dry bulk newbuildings, including three Capesize and three handysize vessels, from Lambert Navigation et.al., at an aggregate purchase price of $530 million. As part of the agreement, the sellers will retain the deposits totaling $53 million. The three Capesize vessels and three Handysize vessels are being constructed in the Daehan and Jinse shipyards in South Korea, with deliveries commencing in the 4th quarter 2008 (two Handysize) through 2009.
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carisk | Categories:
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The Week in Review | November 6th, 2008 |
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Amidst the flood of 2nd quarter analyst reports, we found two comments on Seaspan that we thought were intriguing. First, Justin Yagerman of Wachovia Capital Markets reported that during the quarter Seaspan looked at $3 billion of deals without coming to terms. We wonder if this reflects concerns about credit quality, an issue Seaspan has commented on previously.
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At times, it is extremely difficult to portray the various perspectives of a transaction, particularly when it is in a public deal for obvious reasons. In light of our article last week, Seaspan’s management wanted to set the record straight and provide their insights into the process and in particular the timing and the rationale for being the first shipping public offering of the year despite the credit crunch.
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carisk | Categories:
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The Week in Review | April 17th, 2008 |
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On June 24, Nordic American Tanker Shipping, Ltd. (NAT) announced its decision to purchase a seventh modern suezmax tanker for $71.4 million. Justin Yagerman of Bear Stearns acted quickly to discuss the implications of this for the company he just recently initiated. The seller of the Korean built tanker is presumed to be Frontline (FRO). In January, NAT announced the purchase of the Nordic Fighter for $68.3 million, a sister ship to the most recent tanker purchase. The two tankers are among the four suezmax’s acquired by NAT since 2004. The newest tanker acquisition falls in line with NAT’s avowed policy of expanding through purchases with promising potential. Mr. Yagerman believes that this new vessel acquisition will provide for an increase in net voyage revenue, higher earnings, and share distributions.
After the recent purchase, NAT now has six of its seven ships trading in the spot market. However, Mr. Yagerman explains that although spot-rates usually outperform time charters, Bear Stearns would still like to see some additional long-term charters to add stability to NAT’s cash flow.
Mr. Yagerman believes that NAT will finance this deal with a combination of cash readily available as well as drawing from its currently untouched $300 million credit resource, though this purchase will increase NAT’s daily cash break-even hurdle. The analyst does not expect NAT to come back to the equity market to refinance this debt at any time in the near future.
However, given the fact that NAT’s dividends and earnings are so dependent on suezmax spot rates, Mr. Yagerman finds NAT’s risk/reward is less than convincing. NAT was down 1.1% on June 24 versus the S&P 500, which was down 0.7%; while the rest of the Tanker Universe was down 0.8%. Even though NAT has more than doubled its fleet in less than a year, there is still a significant amount of risk considering the company’s leverage to the suezmax spot market. The latest tanker acquisition follows suit with NAT’s precedent of purchasing vessels at peak prices, which Mr. Yagerman sees as a risk to NAT’s return profile in the current rate environment.
Another cause for concern is NAT’s decentralized vessel management. It is unclear as to who will control the commercial and technical management of the newly purchased vessel. Mr. Yagerman gave the company a rating of Peer Perform, meaning he projects that the stock will perform approximately in line with the analyst’s industry coverage over the next twelve months.
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carisk | Categories:
Freshly Minted,
Market Commentary | June 30th, 2005 |
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Concurrent with its Global Transportation Conference held today in New York, Bear Stearns has made a much-awaited break into the world of shipping analysis through the work of Justin Yagerman. Bear Stearns’ coverage initiation includes Diana Shipping, on whose IPO the firm served as underwriter, OMI, Nordic American, OSG and Teekay. Mr. Yagerman uses clever slogans to sum up the capabilities of each of the companies, citing Nordic American as “yielding results through a simple plan,” Teekay as having “a diversified growth portfolio,” and OSG as “sailing on many seas,” and he initiates all three of these companies with a relatively neutral “Peer Perform” rating. OMI, described as “putting the tanker market into focus,” wins the only “Outperform” rating of the tanker group for virtues including growth and favorable charter rates across its asset classes, strong company-specific chartering performance, and a modern, double hull fleet.
Diana Shipping, the only dry bulk company included, was also awarded an “Outperform” rating with the slogan “a great time to buy dry.” Mr. Yagerman cites Diana as having undervalued shares and thin research coverage in an industry with solid fundamentals. Additionally, the fleet’s age averages only 13 years and the revenue outlook is steady, with all currently owned vessels fixed on time charters. The $20 year-end price target Bear Stearns has for Diana represents a 34% upside from current levels based on 10x 2006E EPS estimate of $1.99. Unfortunately for Diana, neither this nor a positive report issued last month by Jefferies have had much of a strengthening effect on the company’s stock price to date, which at press time sits notably below the $17 offering price at $14.40. Investors looking for value in a seasonally week period may do well to take note.
