Author Topic: SSW - Seaspan  (Read 134429 times)

Uccmal

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Re: SSW - Seaspan
« Reply #380 on: October 11, 2013, 06:14:14 AM »
I had been selling some into the rally.  Then I was buying down to 19.61 yesterday. 

I guess I'll be selling into today.  I am guessing that Gerry has decided to find a better way to finance the new boats. 

It looked like he wanted to try to get cheaper financing than the Preferreds.
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MYDemaray

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Re: SSW - Seaspan
« Reply #381 on: October 11, 2013, 06:34:09 AM »
I had been selling some into the rally.  Then I was buying down to 19.61 yesterday. 

I guess I'll be selling into today.  I am guessing that Gerry has decided to find a better way to finance the new boats. 

It looked like he wanted to try to get cheaper financing than the Preferreds.

Good for them.  I love to see management teams act rationally.  I've watched secondaries where management crams down the offering, regardless of price just to do their expansion plans.  Wang et. al didn't do that.  Says something about them.  I have no position.

VAL9000

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Re: SSW - Seaspan
« Reply #382 on: October 11, 2013, 06:46:35 AM »
I've had my doubts about SSW lately.  I sold my entire position about a month ago.  It was an excellent return all in, but I think the business model is flawed.  A couple years ago the only model was "long term charter", I now see the following breakout:
 - 71 operating vessels
 - 3 vessels no charter
 - 5 vessels < 3 year charter (plus options)
 - 4 vessels bareboat / 5 years

From 0% to 15% dilution of the model..  but the really concerning thing for me is that I haven't seen a single long-term recharter of any vessels.  All vessels that have come off of a long term charter have been redeployed in short term capacity.

I'm sure many vessels will get taken up on longer charters once there is an under-supply situation, but meanwhile SSW is left holding the bag.  The long term charters are set at mid-cycle rates, so SSW will miss the cyclical shipping boom but will be left chartering/day rating during bust cycles.  This will result in an earnings drag.

One other thing that is concerning to me.  SSW tends to negotiate initial contracts and charters during shipping booms (not always, but mostly because of when their customers are willing to enter into long term charters).  This means they are paying top dollar for the vessel, but are chartering out at generally competitive rates because the charters are so long.  This is a different type of earnings drag because the cost of the vessel is fixed and usually ordered in boom times but the charters are variable and not always negotiated in boom times.

JEast

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Re: SSW - Seaspan
« Reply #383 on: October 11, 2013, 07:05:27 AM »
Quote
I think the business model is flawed
Maybe the business model was never understood.  There has never been a plan to recharter 10-12 year old ships to another 10-12 year charter.  No major liner wants to lock themselves into a 10 year contract with an old asset, too expensive on the bunker costs.  Would you want to lease a 10 year old truck/car for another 10 years? 

The plan has always been to attempt to recharter those ships coming off long-term charters for another 3-4 years, then sell them. Rinse and repeat.

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JEast

VAL9000

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Re: SSW - Seaspan
« Reply #384 on: October 11, 2013, 07:31:21 AM »
Quote
I think the business model is flawed
Maybe the business model was never understood.  There has never been a plan to recharter 10-12 year old ships to another 10-12 year charter.  No major liner wants to lock themselves into a 10 year contract with an old asset, too expensive on the bunker costs.  Would you want to lease a 10 year old truck/car for another 10 years? 

The plan has always been to attempt to recharter those ships coming off long-term charters for another 3-4 years, then sell them. Rinse and repeat.

Cheers
JEast

Okay that makes more sense.  Not sure where that's ever been spelled out on earnings calls or in the shareholder materials.  All I ever hear about is "long term charters" and "financial strength".  Never anything about rolling over the fleet, although they do talk about having a young fleet.

It's weird to me that there would be no interest in 10 year charters on 10 year old boats, but there would be sufficient interest in buying 10 year old boats.  Or is SSW waiting until boom times to sell out their older vessels?

Uccmal

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Re: SSW - Seaspan
« Reply #385 on: October 11, 2013, 07:35:13 AM »
Val,

SSW was a small company in the shipping business until more recently.  As such they didn't have the leverage with the shipping yards.  They are now able to buy vessels more strategically.

Over all, They have done a fantastic job so far.  I see no reason they wont continue to do well. I expect the dividend will be raised another 25 cents per share in the new year.

I first bought the stock 4 years ago.  Over that time I have come to respect the Washingtons and Gerry Wang, more and more.  They are the best managed company in the shipping industry, bar none. 

This cancellation of the offering only demonstrates to me the ability of management to adapt and change with conditions, and learn from their mistakes. 

SSW is my largest common stock position.

Edit:  Wang reminds me of Buffett.  He is trying to lower the debt cost, buy vessels when they are cheapest, and keep the cash flow positive and coming through the door.
« Last Edit: October 11, 2013, 07:37:51 AM by Uccmal »
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zippy1

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Re: SSW - Seaspan
« Reply #386 on: November 20, 2013, 06:08:00 AM »
To sell common stock.
Quote
HONG KONG, CHINA--(Marketwired - Nov 20, 2013) -  Seaspan Corporation ("Seaspan") (SSW) announced today that it has priced its previously announced public offering of 3,500,000 Class A common shares (the "Common Shares") at $22.00 per share. Seaspan has granted the underwriters of the offering a 30-day option to purchase up to an additional 525,000 Common Shares. The offering is expected to close on November 25, 2013.
http://finance.yahoo.com/news/seaspan-announces-pricing-3-500-133335813.html

LongTerm

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Re: SSW - Seaspan
« Reply #387 on: November 20, 2013, 07:30:09 AM »
Interesting wording in the announcement, "previously announced public offering". Wasn't the prior offering cancelled as a result of the market reaction to the prior announcement? Did I miss something? I consider management quite savvy but today's announcement has me scratching my head. Shares are down 10% today in reaction to this new announcement on over 10x normal volume. I have to conclude that management is either looking at some fabulous shipbuilding deals or??? I'm not quite sure what.  In fact I'm a bit surprised that the underwriters even agreed to this new offering and the offering price given what happened last time. Anyone else find this strange?

MYDemaray

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Re: SSW - Seaspan
« Reply #388 on: November 20, 2013, 09:12:12 PM »
I do find this strange.  Thought they were acting rationally before by pulling the offering.  By reference, GSL CEO said they were seeing "mid to high teen unlevered IRRs" in used tonnage. No idea about newbuilds.

Uccmal

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Re: SSW - Seaspan
« Reply #389 on: November 21, 2013, 04:17:12 AM »
I too am scratching my head.  I am guessing they need the money for newbuilds.  I will give them the benefit of the doubt. The stock was off 10% on a 5% dilution.  I took the opportunity to buy some more shares at a 6% dividend yield. 
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