Author Topic: SSW - Seaspan  (Read 141352 times)

biaggio

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Re: SSW - Seaspan
« Reply #140 on: March 26, 2011, 05:54:56 PM »
" I had a 50% position (of my net worth) at the time"

Ericopoly, I admire your courage.

Any anxiety at all or lost any sleep?

Was it your plan from the beginning to have a 50% position or did it evolve due the low valuation

I hope I can have that kind of conviction some day.




ERICOPOLY

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Re: SSW - Seaspan
« Reply #141 on: March 26, 2011, 07:36:15 PM »
" I had a 50% position (of my net worth) at the time"

Ericopoly, I admire your courage.

Any anxiety at all or lost any sleep?

Was it your plan from the beginning to have a 50% position or did it evolve due the low valuation

I hope I can have that kind of conviction some day.


I just think it's a form of ignorance -- like, I don't fully understand the risks so therefore I'm not scared away.

But here is what worried me about the company, and the second point is what still worries me about it as a long term hold (although not in the near term):  
1)  Wang is a deal maker.  He isn't going to endure years of doing nothing while patiently de-leveraging.  I think that's the real reason behind the new partnership (or at least it might be what got the discussion started).  They've levered SSW so high there just isn't enough money left for him to swing big and regularly recurring deals with.
2)  Not sure about the lifetime of these ships.  Historically oil has been cheap.  Long term, dramatically higher oil (if that happens) will lead to huge efficiency innovations in ship design.  That would render the legacy fleet obsolete, perhaps a decade early?  Fuel is after all the highest cost in shipping.  Short term oil being high means slow steaming and need for new ships.  But in 15 years will there be a demand for these fuel guzzlers?
« Last Edit: March 26, 2011, 09:23:06 PM by ERICOPOLY »

ERICOPOLY

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Re: SSW - Seaspan
« Reply #142 on: March 27, 2011, 08:34:55 AM »
But yes, it evolved due to low valuation.  Was 20% initially -- a good deal of which I'd bought a bit over $12.  Then in July it went to $10+ change and I bought more, then under $10 I bought more.  Average cost comes to $11.

I should really have more of a process but I don't -- I react emotionally when stocks drop.  But I get a greed reaction, so I tend to overdo it.  Then I whip out the calculators and figure out how much I'll make when SSW restores their full dividend -- then I get anchored to that level of expected dividend and don't want to sell any shares.  Now that the stock has rallied somewhat, I then lose much of my emotional argument for buying in the first place so I get an urge to sell some.

I tend to load up on seemingly obvious winners because I lack the ability to understand the more complex ones?  Once the discussion turns to inventory turnover and all kinds of MBA metrics I glaze over and I'm lost.  I understood the logic behind FUR, SSW, FFH, C, BAC, and I tend to believe I understand MBI. 

Very simplistic, which is why I'm willing to concede that it may just be relative ignorance and psychological faults that are the real cause here.  One of the investors that come to mind is Forrest Gump -- the guy just plowed all of his money into an fruit company and held on until he was ridiculously wealthy.  Most people are scared by tech stocks, but not him.  His advantage is that he didn't realize it was a tech startup.  I don't think I'm quite as bad as him, but it's shades of grey.

Myth465

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Re: SSW - Seaspan
« Reply #143 on: March 27, 2011, 09:04:30 AM »
But yes, it evolved due to low valuation.  Was 20% initially -- a good deal of which I'd bought a bit over $12.  Then in July it went to $10+ change and I bought more, then under $10 I bought more.  Average cost comes to $11.

I should really have more of a process but I don't -- I react emotionally when stocks drop.  But I get a greed reaction, so I tend to overdo it.  Then I whip out the calculators and figure out how much I'll make when SSW restores their full dividend -- then I get anchored to that level of expected dividend and don't want to sell any shares.  Now that the stock has rallied somewhat, I then lose much of my emotional argument for buying in the first place so I get an urge to sell some.

I tend to load up on seemingly obvious winners because I lack the ability to understand the more complex ones?  Once the discussion turns to inventory turnover and all kinds of MBA metrics I glaze over and I'm lost.  I understood the logic behind FUR, SSW, FFH, C, BAC, and I tend to believe I understand MBI.  

Very simplistic, which is why I'm willing to concede that it may just be relative ignorance and psychological faults that are the real cause here.  One of the investors that come to mind is Forrest Gump -- the guy just plowed all of his money into an fruit company and held on until he was ridiculously wealthy.  Most people are scared by tech stocks, but not him.  His advantage is that he didn't realize it was a tech startup.  I don't think I'm quite as bad as him, but it's shades of grey.

Hey man dont change whats worked, and if it aint broke dont fix it. If you were a 2 - 5% in terms of positioning size, I would guess you would be a 9-5er. Just make sure you have enough capital on the side would be my take away.

Also this quote made me think of your process, its something I will have to keep in mind - The market does 95% of the work for you - your problem is not to duplicate research but to identify errors of logic in company evaluations.


I just listened to the call, and you are right. Wang is a deal maker. I doubt this recover, and honestly doubt China's ability to retain their dominance. I think at some point they may be overexposed but what do I know. Also everyone tends to order ships at the same time. Containerships may end up like dry bulks or oil tankers if everyone gets excited. With that said and the new dividend policy I do think you guys are right. I may have to up my bid.
« Last Edit: March 27, 2011, 10:03:28 AM by Myth465 »

ERICOPOLY

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Re: SSW - Seaspan
« Reply #144 on: March 27, 2011, 09:45:52 AM »
Well I saw one of the interviews where Wang was talking about China and how it's growing and people are optimistic and etc...  Then I think about the amount of ships they ordered in 2007...  It's funny because the Washington family is already beyond ridiculously rich... what's up with all the risk for the extra couple of percentage points of compounding?  They could be unlevered and just sail into the sunset.  But that's the problem with me as well.... sailing into the sunset is boring.  These guys just seem to seek maximum excitement.  Maybe it takes one to know one.

They've offset their aggression with long-term contracts, strong counter-parties, interest rate hedges, and whatnot.  So they probably feel like the race car has a nice roll cage and thus they won't get hurt.  And it's true that race cars with roll cages are much safer... but just driving the car slower has it's benefits too.

So I just want to be paid for the risk.  At these prices at least the stock is still priced at roughly (for the cost of buying the existing fleet per share) the same as where fresh money buys a new ship.  But once the stock is like up to the mid-20s then you are holding at a cash flow yield that is much lower than where the market is pricing new ships in the current rate environment (ships become overvalued on a per-share basis).  So I don't think the risk-adjusted metric at that point is anywhere near as good.  However it will be interesting when they trade at a premium because they will likely issue shares to raise capital at this lower cash flow yield per share and then reinvest the money into yet more ships... taking advantage of the cash flow yield delta -- but that delta only exists if the new ships ordered are similarly leveraged (the max).  But look, there's just no way I'd have anywhere near this much SSW at those prices.
« Last Edit: March 27, 2011, 10:12:13 AM by ERICOPOLY »

Myth465

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Re: SSW - Seaspan
« Reply #145 on: March 27, 2011, 10:07:10 AM »
They have a good model but have only dealt with renters not wanting to pay, what happens when ship renters cant pay is one thing the business model hasnt taken into account.

Like you said, at that point I will be long gone so it wont matter much.

ERICOPOLY

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Re: SSW - Seaspan
« Reply #146 on: March 27, 2011, 10:12:34 AM »
Their race car carried a couple of airbags (wholly owned ships) -- but from what I can tell they've already blown out the airbags in the sale-leaseback transactions and seem to be disinterested in having them replaced for the next crash.  They may still prove my worries unfounded on this point, so it's too early to say.

Uccmal

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Re: SSW - Seaspan
« Reply #147 on: March 27, 2011, 10:23:26 AM »
I always have Margin of Safety in mind.  

If China blows up badly, which is a very real possibility what will happen with SSW - as you said Myth renters may decide or may not be able to pay at all.  I dont know anything about Chinese bankruptcy law as applies to entities that are partially or wholly government owned.

That we are heading to an oversupply fo containerships seems like a real possiblity.  I think this explains part of the stock pop this past two weeks.  JV will be taking the newest risk and be down the quality ladder as far as customers, at least at first.

Eric, your psychological analysis is spot on as far as i can tell.  They are all dealmakers.  However, once long term leases are in place, ships built, and a long term operating regimen is in place, it is not inconceivable that Wang leaves SSW and has his management company run things mostly without him there.  

Finally, I hold about a 10% position in SSW - 4th largest.  As per any company I hold, I will sell when other opportunities begin to look better, or if it starts to look worse.  For now, it has lots of mileage left.
GARP tending toward value

gaf63

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Re: SSW - Seaspan
« Reply #148 on: March 30, 2011, 08:01:17 AM »
The Street.Com jumps on the bandwagon today,

http://www.thestreet.com/_yahoo/story/11065006/1/7-companies-to-post-big-profit-gains.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Thinking of pulling some SSW off the table and wait for pull back in this market

Myth465

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Re: SSW - Seaspan
« Reply #149 on: March 30, 2011, 08:09:35 AM »
The Street.Com jumps on the bandwagon today,

http://www.thestreet.com/_yahoo/story/11065006/1/7-companies-to-post-big-profit-gains.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Thinking of pulling some SSW off the table and wait for pull back in this market

I just got back in with Nov calls. I paid much more then I would have prior to the run. Now have to figure out how to get back into pulp. Basically with SSW I took my stock gains from SSW common and put it in calls. Raised cash and have a similar interest.