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Some may say that $$$MR. MARKET$$$ has the body of a Greek God. Others may say that $$$MR. MARKET$$$ looks like a goddam Greek. Since $$$MR. MARKET$$$ is Armenian, this wouldn’t be completely inaccurate. However you weigh in on this, there is no doubt that Greeks have played an important role in the development of our culture.
Who could possibly turn down a syrupy sticky square of baklava:
Or who can forget the weekly suspense and drama thrown up on the small screen when Kojak was holding court:
Who loves ya baby?
Or, who could forget what a total loser Mike Dukakis was in the 1988 presidential campaign:
Having said all that, the greatest Greek of all time was none other than Spiros Arion, who turned the tables on Chief Jay Strongbow, and punched Bruno Sammartino in the balls during the first ever professional wrestling match I ever attended:
As good as the Greeks are in pro wrestling, they are unmatched when it comes to shipping. Hell, Aristotle Onassis was able to get Jackie Kennedy to move from her swank Manhattan apartment to come live with him on some Greek Island. How did he do it? Easy. He built big ships.
Today I bought Excel Maritime (EXM) at 19.12. I will sell it in 4 – 6 weeks at 22.03. Here’s why I like EXM:
Excel Maritime is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. The company’s current fleet consists of 17 vessels (ten Panamax and seven Handymax vessels) with a total carrying capacity of 1,004,930 dwt, and an
average age in years of 13.8.
The Company’s management team has significant experience in operating dry bulk carriers and in all aspects of commercial, operational and financial areas of the business. Through experienced management the Company promotes a focused marketing effort as well as tight quality and cost controls, in conjunction with effective operations and safety monitoring.
The Company’s strategy focuses on fleet expansion and renewal, through timely acquisitions of second hand vessels and disposal of the older vessels. The acquisition candidates are chosen based on selected financial and technical criteria. In terms of fleet deployment strategy , the Company seeks to employ the majority of its fleet in the medium and long term time charter
markets, while operating the remainder of its vessels in the spot and short term time charter markets. The company anticipates that this strategy will result in better opportunities and greater transparency of earnings. From time to time management will change the fleet deployment strategy according to the prevailing and expected charter market conditions.
Look at this chart. Investors are buying up this stock like yayho:
Why buy stock in this company? The answer is, why not? The stock is up 56% in the last 12 months and it has a trailing PE of 10 with a forward PE of 7. It’s dirt cheap, and if its price doesn’t go up anymore, it’s gonna get cheaper.
It’s really simple. They own 17 ships and they charter them out for hire. The ship owners like to lock up some contracts so that they have a guaranteed revenue stream, then they let a certain percentage of their tonnage “float” so that they can capitalize on the sweet spot on “spot prices” for tonnage. With global economies growing and trade imbalances becoming exacerbated, markets are brought into equilibrium using world shipping.
Pop Quiz: As demand for world shipping goes up, do shipping rates go up or down?
If you guessed “up” you win the prize behind the curtain. Excel is ready to take advantage of the fact that since 55% of their fleet operating days have not yet been fixed, Excel will capture some big time margins with these rate increases applied to their available tonnage. Big big year ahead for 2007.
The Baltic dry index for dry tonnage is up 49% in 2006 over 2005, and 2007 is even stronger. An average of 17 vessels were operated during the third quarter 2006 earning a blended average time charter equivalent rate of $19,971 per day, compared to an average of 18.1 vessels operated during the third quarter 2005 earning a blended average time charter equivalent rate of $18,620 per day.
CEO Christopher Georgakis commented: "Our strong operational performance during the third quarter 2006 was a function of the continued strength in the dry bulk markets and of our fleet deployment strategy of period and spot charters. In this context, we achieved a 7.3% increase in the blended daily average time charter equivalent rate over the same three-month period in 2005.
"Our aim is to continue securing part of our fleet under profitable long term employment thereby increasing our profitability while enhancing the stability and predictability of our earnings.
"Accordingly, during the third quarter 2006 we have chartered M/V Angela Star for a period of 24 to 26 months at US $26,500 per day and M/V Forteza for a period of 12 to 14 months at US $28,000 per day, both to first class European charterers.
"At present we have fixed 65% of our fleet operating days for the fourth quarter of 2006 and 25% for 2007. Going forward, we intend to capitalize on the prevailing market strength by opportunistically securing period employment for some of our vessels rolling-off their existing charters.
"We intend to continue to maintain low leverage and warehouse liquidity, which we believe gives us the opportunity to take advantage of fleet expansion opportunities as they arise."
Let’s do the math. If they were averaging $18,000/day per ship in the 3rd quarter, but they are now chartering vessels at $28,000 per day, that means their revenues will increase by 55%. These revenues go right to the bottom line since the cost to operate the vessels don’t change at all. A vessel only needs to earn about $13,000 per day to break even.
Here’s the math. You have 75% of their 17 ships which do not have fixed contracts. You are earning $8,000 more per day (between the Handymaxes and Panamaxe) per ship than you did last quarter on the 13 ships that are not fixed. Remember, Excel fleet utilization has been near 100%.
$8,000 x 365 days x 13 = $47,450,000. Take out 30% for the tax man and you still have $26,000,000 more dollars. Divide that by 20,000,000 shares and you have an additional $1.30 per share for the year on top of the $2.00 per share you were already earning. So you have $2.00 plus $1.30 makes $3.30 per share. At a PE of 10, that projects to a share price of $33. Ka-ching. That’s a lot of baklava. In fact, if Handymax rates go to $26,000 per day and Panamax rates go to $30,000 per day, Excel will generate EPS of $4.35 which would take the stock price into the 40’s.
The balance sheet has never been better, with a Total Debt to Total Capitalization of only 25%. No worries since the are profitable and can easily pay down debt with their cash flow. In fact, EXM has been profitable for 7 consecutive years, a mighty track record in this business. Their fleet expansion was funded through timely equity offerings in 2004 and 2005 and the average life of the ships is less than 15 yrs old. EXM has $90,000,000 of cash on the books, or almost $4.50 per share. That’s 25% of their market cap in cash!!
The strategy going forward is to roll up mom and pop shipping companies, provided that their assets are compatible with Excel’s existing standards.
So whether or not you are Greek because you lived in a fraternity, or you had an old lady Greek neighbor who used to yell at you because your dog “sheets in my yard”, there is no question that there continues to be value in some Greek shipping, particularly Excel Maritime.
I am HUGE!!
$$$MR. MARKET$$$
PS If you liked this write up, send it on to your friends.
Who could possibly turn down a syrupy sticky square of baklava:
Or who can forget the weekly suspense and drama thrown up on the small screen when Kojak was holding court:
Who loves ya baby?
Or, who could forget what a total loser Mike Dukakis was in the 1988 presidential campaign:
Having said all that, the greatest Greek of all time was none other than Spiros Arion, who turned the tables on Chief Jay Strongbow, and punched Bruno Sammartino in the balls during the first ever professional wrestling match I ever attended:
As good as the Greeks are in pro wrestling, they are unmatched when it comes to shipping. Hell, Aristotle Onassis was able to get Jackie Kennedy to move from her swank Manhattan apartment to come live with him on some Greek Island. How did he do it? Easy. He built big ships.
Today I bought Excel Maritime (EXM) at 19.12. I will sell it in 4 – 6 weeks at 22.03. Here’s why I like EXM:
Excel Maritime is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. The company’s current fleet consists of 17 vessels (ten Panamax and seven Handymax vessels) with a total carrying capacity of 1,004,930 dwt, and an
average age in years of 13.8.
The Company’s management team has significant experience in operating dry bulk carriers and in all aspects of commercial, operational and financial areas of the business. Through experienced management the Company promotes a focused marketing effort as well as tight quality and cost controls, in conjunction with effective operations and safety monitoring.
The Company’s strategy focuses on fleet expansion and renewal, through timely acquisitions of second hand vessels and disposal of the older vessels. The acquisition candidates are chosen based on selected financial and technical criteria. In terms of fleet deployment strategy , the Company seeks to employ the majority of its fleet in the medium and long term time charter
markets, while operating the remainder of its vessels in the spot and short term time charter markets. The company anticipates that this strategy will result in better opportunities and greater transparency of earnings. From time to time management will change the fleet deployment strategy according to the prevailing and expected charter market conditions.
Look at this chart. Investors are buying up this stock like yayho:
Why buy stock in this company? The answer is, why not? The stock is up 56% in the last 12 months and it has a trailing PE of 10 with a forward PE of 7. It’s dirt cheap, and if its price doesn’t go up anymore, it’s gonna get cheaper.
It’s really simple. They own 17 ships and they charter them out for hire. The ship owners like to lock up some contracts so that they have a guaranteed revenue stream, then they let a certain percentage of their tonnage “float” so that they can capitalize on the sweet spot on “spot prices” for tonnage. With global economies growing and trade imbalances becoming exacerbated, markets are brought into equilibrium using world shipping.
Pop Quiz: As demand for world shipping goes up, do shipping rates go up or down?
If you guessed “up” you win the prize behind the curtain. Excel is ready to take advantage of the fact that since 55% of their fleet operating days have not yet been fixed, Excel will capture some big time margins with these rate increases applied to their available tonnage. Big big year ahead for 2007.
The Baltic dry index for dry tonnage is up 49% in 2006 over 2005, and 2007 is even stronger. An average of 17 vessels were operated during the third quarter 2006 earning a blended average time charter equivalent rate of $19,971 per day, compared to an average of 18.1 vessels operated during the third quarter 2005 earning a blended average time charter equivalent rate of $18,620 per day.
CEO Christopher Georgakis commented: "Our strong operational performance during the third quarter 2006 was a function of the continued strength in the dry bulk markets and of our fleet deployment strategy of period and spot charters. In this context, we achieved a 7.3% increase in the blended daily average time charter equivalent rate over the same three-month period in 2005.
"Our aim is to continue securing part of our fleet under profitable long term employment thereby increasing our profitability while enhancing the stability and predictability of our earnings.
"Accordingly, during the third quarter 2006 we have chartered M/V Angela Star for a period of 24 to 26 months at US $26,500 per day and M/V Forteza for a period of 12 to 14 months at US $28,000 per day, both to first class European charterers.
"At present we have fixed 65% of our fleet operating days for the fourth quarter of 2006 and 25% for 2007. Going forward, we intend to capitalize on the prevailing market strength by opportunistically securing period employment for some of our vessels rolling-off their existing charters.
"We intend to continue to maintain low leverage and warehouse liquidity, which we believe gives us the opportunity to take advantage of fleet expansion opportunities as they arise."
Let’s do the math. If they were averaging $18,000/day per ship in the 3rd quarter, but they are now chartering vessels at $28,000 per day, that means their revenues will increase by 55%. These revenues go right to the bottom line since the cost to operate the vessels don’t change at all. A vessel only needs to earn about $13,000 per day to break even.
Here’s the math. You have 75% of their 17 ships which do not have fixed contracts. You are earning $8,000 more per day (between the Handymaxes and Panamaxe) per ship than you did last quarter on the 13 ships that are not fixed. Remember, Excel fleet utilization has been near 100%.
$8,000 x 365 days x 13 = $47,450,000. Take out 30% for the tax man and you still have $26,000,000 more dollars. Divide that by 20,000,000 shares and you have an additional $1.30 per share for the year on top of the $2.00 per share you were already earning. So you have $2.00 plus $1.30 makes $3.30 per share. At a PE of 10, that projects to a share price of $33. Ka-ching. That’s a lot of baklava. In fact, if Handymax rates go to $26,000 per day and Panamax rates go to $30,000 per day, Excel will generate EPS of $4.35 which would take the stock price into the 40’s.
The balance sheet has never been better, with a Total Debt to Total Capitalization of only 25%. No worries since the are profitable and can easily pay down debt with their cash flow. In fact, EXM has been profitable for 7 consecutive years, a mighty track record in this business. Their fleet expansion was funded through timely equity offerings in 2004 and 2005 and the average life of the ships is less than 15 yrs old. EXM has $90,000,000 of cash on the books, or almost $4.50 per share. That’s 25% of their market cap in cash!!
The strategy going forward is to roll up mom and pop shipping companies, provided that their assets are compatible with Excel’s existing standards.
So whether or not you are Greek because you lived in a fraternity, or you had an old lady Greek neighbor who used to yell at you because your dog “sheets in my yard”, there is no question that there continues to be value in some Greek shipping, particularly Excel Maritime.
I am HUGE!!
$$$MR. MARKET$$$
PS If you liked this write up, send it on to your friends.
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