TNK?

Discussion in 'Stocks' started by shotstakovich, Feb 8, 2017.

  1. I've initiated a small long position in TNK, a global shipping company (ships crude and refined products).

    Reading through a ship broker's report, it appears that TNK's entire portfolio of ships may be worth somewhere in the range of $6 to $7 bucks per share. The stock trades at $2.35. After netting out debt, adding back cash, some receivables, half of their equity stakes, and netting out liabilities, I can see liquidation value around $1 - $1.5 per share.

    What's interesting about TNK is that it's generating ~15% - 20% of its market cap in free cash flow. If further research provides me a clearer picture of fundamental soundness, I will probably add to my position.

    The CEO of NAT, one of TNK's competitors, has been buying stock in the open market, and owns around $30 million in stock. In a letter to shareholders, even he proclaimed that forecasting the industry is a fool's game, but stated that adding here will probably be a good investment.

    The stock has been trading between $2.2 and $2.4, and it looks like today proved to be a false hook reversal. I wouldn't mind adding in a breakout above $2.45 since the stock is trading at cheap valuations, and with distressed companies, going from "very bad" to just "bad" can be very good for traders.

    I haven't yet completed any research on relative returns of TNK vs. its competitors, but anecdotally it seems like NAT (a more well-known stock) has been trading up while TNK has been down recently. There might be a mean reversion thesis hidden in here as well...
     
  2. JackRab

    JackRab

    A mate of mine does ship banklending deals... last time I spoke to him, he wasn't too optimistic. Don't know about oil ships, but there's a lot of ships out there. Also on banks' books through busted shipping companies.

    If Trump wages a big (trade) war... that situation will worsen...
     
  3. vanzandt

    vanzandt

    I used to own a stock very similar, for the dividend. Check out TNP (Tsakos Energy) in your research.

    I haven't stayed up on these things, but aren't they very closely tied to worldwide oil demand? If oil goes up... they print money. Right now there seems to be a glut. Its probably a safe hold. 88% debt to equity though. PE is low enough.

    These companies are a breed unto themselves. Interesting business to say the least. Always lot of Greeks involved for whatever reason.
     
  4. JackRab

    JackRab

    They have extensive experience in shipping... the Greeks. Not in finance though ;).
    The Greek Government used to give them massive tax breaks... if they paid taxes at all...