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Friday November 13, 2009
Navios (NMM): Income expert eyes dry shipping
In his industry-leading The Cash Machine, he says, "This is an especially opportune time to get on board dry bulk shipper that are executing well in a still-tough environment, such as Navios Maritime Partners L.P. (NYSE: NMM)." "Each day, the Baltic Dry Index calculates the prices to ship raw materials, representing what the end customer pays to have a shipping company ship their goods across the seas on the Baltic Exchange. "Because BDI is forward looking -- most economic indicators are backward looking -- it provides a real-time look at global commodities demand without the threat of manipulation. 
"The Baltic Dry Index is totally devoid of speculative players. Trading on the exchange is limited -- only member companies and relevant parties with contracts to move cargo and ship owners can trade on it. This aspect of the BDI is what makes this index so attractive to me. "Looking back over the past couple of years, the BDI tends to lead the market higher or lower by about two months. "That means the latest firming in the index is foretelling of a higher stock market by yearend. Assuming the BDI is a forward gauge of things to come, then Santa Claus is coming to Wall Street this Christmas. "Navios Maritime Partners L.P. is an international owner and operator of Capesize and Panamax vessels. This dry bulk shipping company is a MLP formed by Navios Maritime Holdings, which has a 55 years of operating history in the dry bulk shipping industry. "Currently, NMM's fleet includes nine modern Panamax ships, which carry a variety of dry bulk commodities, including iron ore, coal, grain and fertilizer, and one modern Capesize ship, which primarily carries iron ore and coal. "Its ships are chartered out under long-term time charters -- most have an average term of about 4.1 years. And these charters are to companies like Cargill International SA, Mitsui O.S.K. Lines, Ltd. and Rio Tinto Shipping Pty Ltd. "It has contracted out 100% for 2009 and 2010, 82% for 2011 and 76% for 2012, which will generate revenues of $91.7 million, $104.7 million, $89.6 million and $84.5 million, respectively. "Navios Partners also completed its public offering of 2,800,000 common units at $12.21 per unit in late September, raising $34.2 million to fund its fleet expansion and/or for general partnership purposes. "With the stock trading at $13, the secondary offering is an obvious winner and provides new working capital to expand operations and maintain a conservative balance sheet. "A 1.3% increase in its distribution to $0.405 per unit for third quarter 2009 is a real eye opener in a sector where practically all dividends have been omitted completely. "So, being able to lock in a 12.40% in a sector that is showing early signs of a recovery make NMM a nice addition to our aggressive high yield portfolio." |
News Flash
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"I've decided to see if we can make some money with companies shipping dry cargo to Asia and the rest of the world," says growth & income expert