Links
Capital Market Strength Makes Winners all around in ATB GMR Transaction
In a market in which issuing new equity at or above net asset value is nearly impossible, and at a time when high payout shipping companies are struggling to grow, General Maritime’s all stock acquistion of Arlington Tankers not only makes perfect economic sense – the cashless and symbiotic nature of the deal is probably a blueprint for a few more transactions to come.
In the Eyes of the Analysts – Seaspan
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.
The Wall Street Journal’s Shipping Analysts Of the Year
For a Wall Street analyst the annual Wall Street Journal Best on the Street rankings is like an AcademyAward, only worth more, certainlyto those investors who bought basis the winning analysts picks.
This year Scott Burk at JPMorgan, but Bear Stearns when his picks were made (JPM acquired Bear Stearns in a sub-prime fire sale last March) came out number one in the Industrial Transportation classification. Doug Mavrinac of Jefferies & Co came in second and Omar Nokta with Dahlman Rose grabbed the third spot.
DryShips Launches Bid for Ocean Rig, Plans Ultra Deepwater Spin-off
When DryShips first purchased a 40.4% stake in Ocean Rig from Cardiff Marine in December 2007 for $405 million, shareholders were perturbed and correspondingly punished the share price. Why had a dry bulk play entered the rig market, they wondered? And why did DryShips purchase interests from George Economou’s private company Cardiff Marine just weeks after Cardiff had purchased the interests itself – for a higher price? To Mr. Economou it was a shrewd business move and a good opportunity to diversify, but to shareholders it was perplexing and made the future more uncertain – and therefore more risky.
The Week in Review
While shipping stocks are no longer booming, the underlying shipping markets remain healthy. Jonathan Chappell and his team at JP Morgan are looking for near-record tanker rates at the end of 2007 to drive up 1Q08 EPS for tanker stocks and also believe that the tanker spot markets will hold up better than expected going forward. On the dry side, Urs Dür at Lazard sent out a note this week to correct common investor misunderstandings regarding the BDI, noting that it is not correlated to near-term world trade. He also expects Chinese iron ore price negotiations to be completed by March 2008, which combined with low inventories in China should lead to near-term improvements for dry bulk freight rates. Omar Nokta and his team at Dahlman Rose note that the tanker market could see some support as AG March cargoes come into the market this week while also observing that the dry bulk market has gained some positive momentum, though this has yet to be reflected in stock prices.
The Official Guide To Marine Finance Providers
Shipping Index
