Author Topic: SSW - Seaspan  (Read 138712 times)

Uccmal

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Re: SSW - Seaspan
« Reply #300 on: December 14, 2011, 06:44:43 AM »
Volume yesterday was about 3.8 million.  I am wondering if sellers were just trying to take advantage of the rise to get rid of some stock and buyers were looking at it from the arb. perspective.

Volume today is tiny, so far. 

I dont really care either way.  My target is above $20 subject to adjustment as more info arrives.
GARP tending toward value


PlanMaestro

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Re: SSW - Seaspan
« Reply #301 on: December 15, 2011, 08:34:17 AM »
Given the length of the SSW thread I wonder why nobody has mentioned GSL as an investment opportunity. Are there any specifics reasons?


Packer16

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Re: SSW - Seaspan
« Reply #303 on: December 15, 2011, 11:33:41 AM »
The main risk with GSL is their customers are ZIM and CGM (both highly levered shipping firms) and these firms have high default risk and the ship leasing businesses is for the most part a ship financing business.  Costamere is another ship leasor with a more stable customer base but sells at a premium to Seaspan.

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PlanMaestro

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Re: SSW - Seaspan
« Reply #304 on: December 15, 2011, 11:55:25 AM »
The main risk with GSL is their customers are ZIM and CGM (both highly levered shipping firms) and these firms have high default risk and the ship leasing businesses is for the most part a ship financing business.  Costamere is another ship leasor with a more stable customer base but sells at a premium to Seaspan.

Packer

Customer concentration has been mentioned as an issue, but when a whole sector is under distress, sometimes concentration is better than diversification if you go with the strongest. Zim is very small client, it is mostly about CMA CGM.

CMA CGM was one of the few profitable companies last year, does not have an unmanageable newbuild program, and raised substantial capital (500M+) in the middle of the crisis. It also has sport assets to support that debt. It is is probably the strongest of the bunch (better than Maersk) and is not playing hardball as COSCO (They own subordinated shares of GSL).

Not that I do not like SSW, just trying to assess the relative risks.

PlanMaestro

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Re: SSW - Seaspan
« Reply #305 on: December 15, 2011, 02:01:53 PM »

Packer16

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Re: SSW - Seaspan
« Reply #306 on: December 15, 2011, 03:46:28 PM »
The one thing that did cause me to pause was CMA CGM's credit rating of CCC+ and current bond prices in the 40s.  Seaspan in contrast had all A to AAA clients.

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PlanMaestro

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Re: SSW - Seaspan
« Reply #307 on: December 15, 2011, 03:49:15 PM »
The one thing that did cause me to pause was CMA CGM's credit rating of CCC+ and current bond prices in the 40s.  Seaspan in contrast had all A to AAA clients.

Packer

Very interesting Packer. Not sure why the discrepancy in their ratings considering the others large orderbooks while losing money. And it is not like the other are not levered.

Packer16

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Re: SSW - Seaspan
« Reply #308 on: December 15, 2011, 03:55:12 PM »
I am not sure how the CMA CGM "earnings" are calculated but I have a tendency to trust the bond market as an indicator of defualt risk and when I bought SSW it was as cheap as GSL.  Right now SSW is more expensive but still cheap when compared to Costamere and other leasing fimrs such as GATX

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PlanMaestro

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Re: SSW - Seaspan
« Reply #309 on: December 16, 2011, 08:36:19 AM »
I am not sure how the CMA CGM "earnings" are calculated but I have a tendency to trust the bond market as an indicator of defualt risk and when I bought SSW it was as cheap as GSL.  Right now SSW is more expensive but still cheap when compared to Costamere and other leasing fimrs such as GATX

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The bond market sometimes can be wrong, specially these days for a European company. The current CMA CGM bond price is worse than in 2009 when CMA CGM was raising capital, his build program was twice as today, had short term maturities, and was losing money.

CMA CGM refi'd out of their '12/'13 unsecureds into '17/'19's and raised $500M from Yildrim for a 20% stake. There were several PE firms willing to buy it in those dark times but Saade (CMA CGM CEO) battled them out. Even the French government offered to infuse capital.

COSCO probably has a worse balance sheet and larger newbuild program than CMA CGM. Also operationally CMA CGM has been the leader in forging alliances (colluding) in their main routes to "stabilize" prices.

My main worry is GSL's LTV covenant (not sure how SSW is handling this) that has been waived a couple of times but can be a real pain in case of a real crisis.