Marketplace Roundtable

Genco Shipping (GNK) CEO, John Wobbensmith, joined Value Investor's Edge Live on Jan. 12, 2022, to discuss the dry bulk shipping markets and company prospects for 2022. GNK has spent the past few years renewing the fleet and rapidly deleveraging the balance sheet to prepare for a new dividend policy of near-100% free cash flow payouts. The dividends will be variable, and will depend on underlying market conditions, but I am bullish on the company structure and I believe the valuations are attractive at this juncture.
Topics Covered


(1:45) Current market balance and setup for dry bulk?


(6:30) China dynamics in 2022: potential headwind?


(11:00) How long would it take to order new dry bulk vessels?


(14:15) Impact of EEXI to GNK and overall market?


(19:00) Discussion of dividend policy: reserve amount?


(23:00) How will repurchases factor into capital allocation?


(26:30) Why does Genco trade at a significant discount to peers?


(30:15) What if the high dividend fails to improve valuations?


(32:00) Growth if GNK trades at a premium to NAV?


(34:00) Largest risk factors in the current dry bulk market?


(37:45) Why invest in Genco versus other dry bulk names?

Danaos Corp (DAC) CFO, Evangelos Chatzis, joined Value Investor's Edge Live to discuss the containership leasing markets and prospects for 2022. DAC has been a massive winner from the ongoing supply chain crisis, but the 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.
Topics Covered

(2:15) Update on ocontainership markets: how long can strength last?


(6:00) Liners gladly taking ships 2023-2028, what is the market ‘missing?’


(9:15) Potential to sell any more older ships?


(11:15) Further appetite to add growth deals in this market?


(12:45) What about newbuilds with long-term charters attached?


(15:15) Will cash be wasted on bad growth deals?


(18:00) How can Danaos close the massive valuation gap?


(20:45) Dividend policy and future payout policy?


(22:30) Balance sheet: leverage target and use of funds?


(27:30) Danaos plans for ZIM stake? Structure to reduce taxes?


(31:00) Share repurchase program on the table?


(34:45) What are the key risks to this market and to DAC?


(36:45) Potential for future contract rolls? CMA CGM “market rate”?


(40:30) Interest in a share split? Potentially 5-1?


(42:15) Why invest in DAC versus other containership peers?

Zim Integrated Shipping (ZIM) was one of my top picks during 2021 and I have heavily covered the company privately and publicly dating back to last February after their IPO. My most recent full-length report was shared in early-December and I have further increased my earnings expectations since then due to the remarkably persistent freight rates. 


(1:30) Outlook for the containership business in 2022?


(5:15) Risk of a near-term drop in rates? Largest risks in 2022?


(8:30) Update on LA/LB service, still diverting ships?


(11:00) Current freight negotiations, contract mix going forward?


(18:15) Status of 2M Alliance negotiations, any changes?


(20:30) Dividend policy: what determines 30-50% payout range?


(24:30) What to do with remaining cash: capital allocation priorities?


(33:15) Why not have an active share repurchase? Block purchases?


(39:00) Update on potential tax rate reduction?


(44:15) Results of digital ventures and investments? Valuation potential?


(52:00) Potential for FY22 earnings to be even higher than FY21?

The Textainer Group (TGH) management team joined Value Investor's Edge Live on January 10, 2022, to discuss the container box leasing markets and prospects for 2022. TGH spent most of the past 18-months prioritizing growth capex, but they have also been actively repurchasing shares, and they re-launched their dividend last quarter. As we shift into 2022, higher shareholder returns appear likely as growth capex will eventually slow down. TGH has signed most of their recent growth on 12-year to 14-year contracts, so once the forward growth slows, TGH will have enormous resources available to either pay large dividends or repurchase more shares.
This interview and discussion of the underlying LNG global markets is relevant for anyone with container shipping interests or investments, including firms such as Atlas Corp (ATCO), Costamare (CMRE), Danaos Corp (DAC), Euroseas (ESEA), Global Ship Lease (GSL), Matson (MATX), Navios Partners (NMM), Triton Intl (TRTN), and Zim Integrated Shipping (ZIM). 
Topics Covered

(2:00) How are box leasing prospects shaping up for 2022?


(4:45) Is capex slowing in 2022, or might volumes be similar to last year?


(6:45) Current economics in growth projects? Still near record levels?


(9:00) When will free cash flow shift towards higher shareholder returns?


(11:00) Balance sheet update? Still targeting 75-80% leverage?


(16:00) Preferred equity discussion- potential for more?


(17:30) When will lower legacy contracts roll to new deals at higher rates?


(21:00) Penalty rate on old contracts vs. current market rates?


(26:00) Potential for dividend raises going forward?


(29:30) Timeline for shifting into heavier shareholder returns?


(33:30) How should investors value a business like Textainer Group?


(37:00) What else can TGH do to close the massive stock valuation gap?


(38:30) What are the key risks and concerns for 2022 and beyond?


(42:30) Counterparty risk and contract strength/structure?


(48:45) What is the risk if we have huge inflation in the coming years?


(51:45) Why should investors choose TGH as an investment vs. peers?

Chris DeMuth discusses his best idea for 2022, RENN. RENN was on a previous podcast pitched by Ian Bezek as a legal play; since then, RENN settled with minority shareholders for a record payout. However, in December, RENN's shares sold off massively as a judge rejected their proposed settlement with minority shareholders and ruled the payout should instead go to former shareholders; Chris explains why he thinks that ruling is wrong and likely to be overturned.

Chapters
0:00 Intro
1:50 RENN background
4:20 What's happened since the last RENN podcast
8:20 The settlement announcement in October
12:35 What happens in December / why the stock craters
19:45 Why are current shareholders appealing the judge's ruling?
24:00 What does a derivative suit mean and why is that important?
30:00 Were there any precedents for former shareholders getting the settlement payout?
35:30 Discussing the unique minority shareholder only payout
38:50 Could the settlement be recut to pay directly to the company?
44:50 What does the timeline going forward look like?
46:30 What happens to the "excess legal fees"?
54:30 Why a quick decision on the appeal could be good
57:35 What odds does Chris give for the appeal winning?
1:00:10 Bear push back: The Sprint / TMUS precedent
1:05:40 Closing thoughts

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Oeystein Kalleklev, CEO of Flex LNG (FLNG), a leading ultramodern LNG shipping company, joined J Mintzmyer's Value Investor's Edge Live on June 10, 2021, to discuss the LNG shipping markets and capital allocation priorities for Flex LNG. Flex has set an upsized dividend level of $0.40/qtr and appears set to support this payout, and potentially even higher payouts, due to excellent time charter fixtures. Despite this progress, FLNG still trades at a significant discount to NAV if we utilize newbuild asset parity, which I estimate at nearly $20/sh. This implies over 45% of equity upside in addition to a nearly 12% income yield. FLNG is likely to raise the dividend even further by late 2021!
This interview and discussion of the underlying LNG global markets is relevant for anyone with LNG shipping or LNG export infrastructure investments, including Cheniere (LNG), Cheniere Partners (CQP), GasLog Partners (GLOP), Golar LNG (GLNG), Hoegh LNG Partners (HMLP), Teekay LNG Partners (TGP), and Tellurian (TELL).
Topics Covered

(3:00) What is driving the strength in LNG markets?


(9:00) What is the spread between MEGI/XDF and TFDE rates?


(12:00) Any additional charter coverage planned?


(14:00) Any appetite or opportunity for fleet growth?


(17:30) Potential to increase share purchase authorization levels?


(21:00) Commentary on dividend program and sustainability.


(23:45) What are the primary risks in this market?


(28:00) Any impacts/risk to upcoming regulations? Any benefits?


(33:00) Technical difference between ME-GI, ME-GA, and X-DF designs?


(38:30) Any concern about the LNG orderbook? Qatar orders?


(47:15) Commentary on recent interest rate swap transactions?


(52:30) What differentiates FLNG from peers and other shipping firms?


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Hugo De Stoop, CEO of Euronav (EURN), a leading crude tanker company, joined J Mintzmyer's Value Investor's Edge Live on June 9, 2021, to discuss the crude tanker markets, recovery trajectory, and capital allocation priorities for Euronav. This interview and discussion is relevant for anyone with crude tanker or product tanker investments, including Ardmore Shipping (ASC), Diamond S Shipping (DSSI), DHT Holdings (DHT), Frontline (FRO), International Seaways (INSW), Navios Maritime Acquisition (NNA), Nordic American Tankers (NAT), Scorpio Tankers (STNG), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP) and Torm (TRMD).
Although it may seem a bit dated since this interview was conducted about two months ago, very little has changed in the crude tanker markets since we last chatted, so the content should be useful for all investors interested in Euronav or the overall sector. It's worth noting that the emergence of the Delta variant has effectively pushed back the crude tanker recovery scenario by at least 2-3 months so far, so even though the big picture situation is similar, the turnaround timing has been pushed back a bit further.
Euronav is set to report Q2-21 results on Thursday, Aug. 12, with a conference call at 0800 EST. This interview should act as a useful primer before these results.
Topics Covered


(2:00) Current state of the crude tanker market? Past the bottom yet?


(5:00) Impact of Iran sanctions coming off soon?


(9:00) Any concerns about the current tanker orderbook?


(13:45) How do current environmental proposals impact EURN?


(19:45) Economics of investing in environmentally friendly upgrades?


(24:00) Are scrubber retrofits attractive here with larger spreads?


(25:45) Environmental impact from copper-oxide hull paints?


(27:30) Will 2023 EEXI impact EURN? Risks of divesting older ships?


(33:45) Any risk of exposure to future ‘green recycling’ requirements?


(36:30) What are Euronav’s current capital allocation priorities?


(41:30) Any plan to address adverse tax-withholding from dividends?


(44:45) Update on ULCC assets?


(47:00) Commentary on FSO JV? Any divestment potential?


(50:30) Why invest in EURN versus peers? Differentiation?


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Constantin Baack, CEO of MPC Containers (OTCPK:MPZZF), a leading small-sized containership lessor, joined J Mintzmyer's Value Investor's Edge Live in June 2021 to discuss the surging containership markets and company strategy to benefit from these elevated market levels.
Although MPCC is not currently listed in the US markets, there's sufficient trading liquidity on the Oslo Exchange under the stock symbol "MPCC" and they're considering a potential US-listing if market conditions remain favorable and their market capitalization exceeds $1B.
For more particular information on MPC Containers, I highly recommend reviewing their latest investor presentation, which was updated on June 22. MPCC is set to publish Q2-21 earnings results on Aug. 19.
For readers and listeners primarily interested in US-listed names, the primary comps include Atlas Corp. (ATCO), Costamare (CMRE), Danaos Corp (DAC), Euroseas (ESEA), Global Ship Lease (GSL), and Navios Maritime Partners (NMM). Included market content should be relevant for investors in all of these names.
Topics Covered

(1:45) What is primarily driving the market strength? How long can it last?


(4:15) What are the primary risks for investors to watch?


(10:45) How large is the discount for 2-3 year charters versus 1y quotes?


(12:45) The Harpex index is due for a massive upward revision?!


(15:15) How far in advance are you fixing your vessels?


(18:00) Are there any opportunities to acquire more secondhand tonnage?


(21:00) Any clear negatives to recent containership transactions?


(23:45) Plans for a dividend? Expected timeline for first payout?


(26:15) Current economics for newbuild tonnage for feeders/midsize?


(30:30) Upcoming impact from 2023 EEXI and/or bunker fuel tax?


(34:30) Any impact/concern due to the increased focus on ‘green recycling?’


(37:15) Current economics from scrubbers? Any plans to add more?


(41:15) What differentiates MPCC? Why choose this stock over others?


(44:00) Future plans for a US listing?


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