BALT was designed to be a pure play, based upon the day rates of the BDI. Within the BDI, there are numerous rates, depending on the size of the ship. The biggest ships are Capesizes; BALT owns two of them.
Do you know where day rates were for Capesizes when they reported earnings?
Answer: $5,000 per day.
Do you know where they are now?
$41,000
If you combine all of their ships together and figure out what they make on a daily basis, based on today’s rates, that number is $15,000 per day. If you take that 15k times 11 ships by 90 (days in the qt.), they stand to do $13.5 million in revenue.
Do you know what they did last quarter?
Answer: $6.5 million.
Their net income break even number is $13,000 per day, meaning, at current levels, the company is operating in the black and will most likely return earnings back to shareholders, as it is company policy to do so. They currently pay a 1 cent divvy, despite operating in the red.
There isn’t a risk of dilution, because the company just raised $60 million. Instead, they will take said cash to buy more ships, investing in their business at a time when it makes sense. Not too many shippers can do this, since they are burdened with crushing debt loads.
Talking with management and people in the industry, I can tell you that demand for iron ore out of China is real. They aren’t restocking either, since inventories are low. They’re probably using it to build tanks to fight us in a world war. On the supply side, fleet growth is stymied at a paltry 3-5% this year, at least 10% off historical averages, due to scrapping and the inability for many shippers to finance new builds.
Throw all of the valuation numbers out the window. This company isn’t trading 5x sales, but 2. Analysts aren’t even updating their numbers–because they missed the move. No one is calling the company!
Like it or not, analysts will need to bring their guidance into line with reality, which will shock and surprise many, who will find out for the first time that these companies are growing at 100% clips on a quarter to quarter basis.
There isn’t a better growth story.
http://www.youtube.com/watch?v=gAjwV0ll03Y
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The Fly is God.
All Hail King Fly!
Jesus that will be one hell of a “surprise” dividend.
I followed into $BALT at $5.23 for two reasons. 1) TheFly has been on fire as of late and 2) The logic behind this trade has been crystal clear to me.
Decent historical chart I came across courtesy of Hofstra University. http://people.hofstra.edu/geotrans/eng/ch7en/conc7en/bdi.html
I think GNK is a good lotto here, especially after today’s beatdown. I’m a buyer tomorrow. Also, I stayed long AMBA so Fly gets a hat tip for that trade. I’m being patient with IMMR as well. Thanks Fly 🙂
Clearly this is The Year of The Fly… very hot with the picks.
How long until coal miners join this party?
never
China’s largest dry bulk shipper
http://finance.yahoo.com/q/bc?s=601919.SS&t=5y&l=on&z=l&q=l&c=
Does the product being shipped, not become more expensive?
quick note, the math is off. I assume you mean 150k per day?
fixed it, thanks
do you see this as a quick trade, hold through earnings or long term?
all depends on speeds of movement
Senor Fly, any opinion on the ben wa ball and gerbil stuffing biz news channel’s lovers spat with jcp? The obvious confidence building for the game and such. Also, the disaster brewing in the whores halls of DC. The 0 care is here and the peeps are fucking pissed. Can not remember a more polarizing moment. The Iraq war does not come close.
I sent this video to a friend yesterday and suggested that they prepare themselves to experience the greatest interview ever conducted (no hyperbole).