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...
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...
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