Author Topic: ATCO - Atlas Corp  (Read 189658 times)

petec

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Re: ATCO - Atlas Corp
« Reply #610 on: May 09, 2020, 10:10:49 AM »
I canít see the 2019 financials - could you post a link? Also to your source for the comments about lease cost and strategy please.

My assumption is that deferrals (by lenders and lessors) are more likely than bankruptcy, but I could be WAY wrong.

I would also assume ATCO would be moderately happy to give lower rates, or leases indexed to spot rates, in return for longer leases.

Interesting that Brookfield say container traffic through their ports is now picking up after troughing in q1 when China shut down.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A


petec

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Re: ATCO - Atlas Corp
« Reply #611 on: May 09, 2020, 10:47:08 AM »
Also I see Yang Ming just raised preferred capital in a private placement.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

Thrifty3000

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arcube

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Re: ATCO - Atlas Corp
« Reply #613 on: May 15, 2020, 09:11:51 AM »
Am I reading this right?

Fairfax Financial Holdings has a position in this equal to roughly 54% of portfolio?

Parsad

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Re: ATCO - Atlas Corp
« Reply #614 on: May 15, 2020, 09:45:58 AM »
Am I reading this right?

Fairfax Financial Holdings has a position in this equal to roughly 54% of portfolio?

The data is skewed. 

- Fairfax's portfolio is like $30B, so $800M would be about 2.8%. 
- Of the non-cash/non-bond assets tied up in equities/businesses, it probably makes up like 18% or so...I'm just eyeballing without looking at the financials. 
- Of just trading equities they've invested in (XOM, GOOG, BB, ATCO, etc)...$3-4B...probably like 25-30%. 

Cheers!
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arcube

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Re: ATCO - Atlas Corp
« Reply #615 on: May 15, 2020, 10:00:33 AM »
Am I reading this right?

Fairfax Financial Holdings has a position in this equal to roughly 54% of portfolio?

The data is skewed. 

- Fairfax's portfolio is like $30B, so $800M would be about 2.8%. 
- Of the non-cash/non-bond assets tied up in equities/businesses, it probably makes up like 18% or so...I'm just eyeballing without looking at the financials. 
- Of just trading equities they've invested in (XOM, GOOG, BB, ATCO, etc)...$3-4B...probably like 25-30%. 

Cheers!

Thank you for the clarification Sanjeev.

Thrifty3000

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Re: ATCO - Atlas Corp
« Reply #616 on: May 22, 2020, 12:03:56 PM »
Has anyone worked out whether the lifetime value of a ship is actually positive?

It was a concern on this thread a couple years ago that there was a negative lifetime value. (At which point the posters who originally carried this thread threw in the towel on Seaspan. Then David Sokol came along and a different group of posters picked up the conversation.)

The concern was a ship looks like a great investment during the long term charter phase, but after that the economics deteriorate fast, culminating in a big loss ultimately taken when the ship has to be scrapped - resulting in a negative lifetime value.

The thesis was the only way to overcome negative lifetime value near term is to run a quasi-ponzi scheme. You have to buy lots of new ships on long term charter to make near term gains look strong. The problem is once the market eventually saturates and you have more ships going off charter than you have new boats to offset losses then the business collapses.

Iím particularly curious about the amount of free cash generated during the long term charter relative to the original cost of the ship. That would give an idea of the odds of breaking even over the shipís remaining life.

I would normally throw this in the too hard pile. But, I mostly hope someone at Fairfax has done this kind of per-ship analysis. I think thereís a lot of trust at Fairfax that Sokol will work his magic in an entirely different industry than he did at Mid American. (Yet, Sokol has invested in companies in the past that he publicly recognized after the fact didnít earn the cost of capital - see Middleburg Bank. Iím concerned this is another such case.)


Thrifty3000

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Re: ATCO - Atlas Corp
« Reply #617 on: May 22, 2020, 02:20:31 PM »
Hereís a Very Rough example of the negative lifetime value (if you go back to the pre-Sokol years in this thread you can see where the concerns were raised after boats started getting scrapped for much lower than their carrying value):

Acquire boat for $100 million

First 10 years:

- Long term charter nets $3 million annually for a total of $30 million.

Next 10 years:

- Boat basically breaks even on short term rates netting a total of $1 million over 10 years.
- Boat is valued at $35 million on the books.

End of year 20:

- Boat is sold for scrap for $1 million.
- $34 million of boat value is written off.

Lifetime value of the boat is negative. But, earnings and free cash looked decent during the first 10 years.

brycepeterson

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Re: ATCO - Atlas Corp
« Reply #618 on: May 22, 2020, 03:19:59 PM »
Thanks for the thoughts Thrifty - I've been wondering same thing.  I own the Series H and I preferred shares.  Have not touched the common shares.  My sense is bad business to own, but good enough to lend to (bonds or preferred shares).

Thrifty3000

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Re: ATCO - Atlas Corp
« Reply #619 on: May 30, 2020, 12:17:57 PM »
For less than the price of a new ship Atco could buy out their second largest publicly traded competitor, Danaos, which would increase TEU by over 30%. Danaosís market cap has dropped to less than $100 million.