Marketplace Roundtable

Danaos Corp. (NYSE:DAC) CFO, Evangelos Chatzis, joined Value Investor's Edge Live on 16 June 2022 to discuss the current containership leasing markets and capital allocation priorities going forward. DAC has been a massive winner from the ongoing supply chain crisis, but they have taken the long-term view with very responsible moves including comprehensive refinancing, massive deleveraging, and fixing their fleet onto medium- and long-term contracts to lock in sky-high rates. DAC has benefitted from a significant investment in Zim Integrated Shipping (ZIM), which they have partially monetized over the past six months.
Despite executing in near-perfect form, DAC stock has been stagnant the past few months and has now fallen back to negative territory y/y. This position is one of our top ideas at Value Investor's Edge, and we were very encouraged by the recent authorization of a $100M share repurchase program. DAC short interest has increased this summer and now looks to be a coiled spring ahead of what is expected to be multiple years of consecutive earnings blowouts amidst surging free cash flows. Our current fair value estimate is $125/sh, which implies around 80% upside to recent trading ranges. 
This interview and discussion of the underlying containership markets is relevant for anyone with container shipping interests or investments, including firms such as Atlas Corp. (ATCO), Costamare (CMRE), Euroseas (ESEA), Global Ship Lease (GSL), Matson (MATX), Navios Partners (NMM), Textainer Group (TGH), Triton Intl (TRTN), and Zim Integrated Shipping (ZIM).
Topics Covered


(0:00) Intro/Disclosures


(1:45) Update on overall containership leasing markets.


(6:00) What is the market missing when selling off all these stocks?


(8:15) Any restrictions with the share repurchase program? Available now?


(10:15) Why $100M for the repurchase program (vs. more or less)?


(11:30) Why not just take the company private?


(14:15) Review of stock price vs. enterprise valuation.


(17:45) Newbuild strategy and overall approach?


(21:45) Target charter durations?


(24:15) Planned leverage for newbuild assets?


(27:30) When might more newbuilds be added?


(33:30) Likely economic return from newbuild transactions (ROE, etc)?


(36:15) Any potential for secondhand vessel purchases?


(37:30) Potential for more vessel sales? Forward sales?


(42:30) Dividend policy: potential for a special div or near-term raise?


(44:45) Any changes to ZIM divestment policy?


(46:00) Charter nuances with HMM extensions, CMA CGM options, etc.


(49:00) Repurchase lock-up? Q2 reporting timeline?

John Wobbensmith, CEO of Genco Shipping (GNK), joined J Mintzmyer's Value Investor's Edge Live on June 14, 2022, to discuss the dry bulk markets and forward prospects and capital allocation. Genco Shipping is a major US-listed dry bulk company with 44 vessels on the water. We discussed overall dry bulk fundamentals, ranging from China's impact on markets to the impact of the Ukraine invasion on midsize trade routes in grain and coal. We also reviewed the economics of GNK's scrubber program and the updated shareholder returns program. Genco will pay out nearly 100% of free cash flow going forward and aims to be net debt free by next year.
This interview and discussion is relevant for anyone with dry bulk investments or interest in the overall sector, including Diana Shipping (DSX), Eagle Bulk (EGLE), EuroDry (EDRY), Grindrod Shipping (GRIN), Golden Ocean (GOGL), Navios Maritime Partners (NMM), Pangaea Logistics (PANL), Safe Bulkers (SB), Seanergy Maritime (SHIP), and Star Bulk Carriers (SBLK).
Topics Covered


(0:00) Intro/Disclosures


(1:45) Dry bulk market overview


(6:00) Additional color on China dynamics and Ukraine impacts?


(10:45) Updated views on market vs. early-2022 expectations?


(14:30) Will elevated opex levels remain going forward, or just a one-off?


(17:45) Update on scrubber spreads and company strategy?


(21:30) Any interest in secondhand vessel acquisitions?


(23:30) Desire to further reduce debt or still targeting net debt zero?


(25:30) Any interest in repurchases?


(27:30) Discussion on the merits of zero net debt strategy.


(35:45) Review of newbuild markets, any interest here?


(39:00) Why invest in GNK vs. other dry bulk peers?

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