Regarding fees, every now and then they pay themselves a bonus for all the hard work they do. This year it was a 1.0 m which i totally disagree with.
Regarding the 20 year dividend history, the last few years they have been lacking and I find it irritating the MGT keeps touting 20 years of dividends. Length of time doesn't matter, the amount does. Nordic American Tanker (NAT) does the same thing, totally bogus and it loses credibility.
Third, you didnt mention the 20 years of constant asset write downs. Go take a look at annual report and look for the line called impairments. So their pricing policies doesn't cover (residual value risks) the risks of asset impairments in poor markets. I believe they'd rather have a bad deal than no deal at all. don't like the focus in one sector. TNK focus on midsize, DHT vlcc large sizes.
They are all over the place with investments in dirty small med large, LNG, product tankers etc
When they do have an impairment , they stress its non cash...duh thats because the cash has been previously spent in a prior period
Fourth, the transparency sucks as far as I'm concerned. They took the share count from 19.6 m to over 28 m in one year and didn't say a peep about it. Look at quarterly reports. They show avg shares O/s and not actual count and they dont show a detail funds flow statement. Many shares were issued at 8 or lower. Is that good capital management?
Fifth, late reporting of results. They still haven't issued the detailed 6-k for q3 and we are in Feb 2023, wtf!!
They have "lucked out" with a rebound in LNG rates and tanker rates.
Ive been in and out of this name for last 25 years.
The best reason to own it is operating leverage in firm markets. But if we have firm markets other companies will do well too. Today as I write this tnk is up 8 % whilst TNP is 4.5 %so it's lagging
One final suggestion, calculate a FCF to EV rate. You pointed out the ev is 2.5 b. I want to make 20 % min. 20 % of 2.5 b is 500 m . Will TNP do that?
Agreed with all of the above, there isn't much transparency and their long-term charters are straight out bad.
I doubt they can make 500M FCF. Simple FCF calc for Q3 would be 42M net inc+36M in depreciation to 78M in cash flow. Unless markets are very strong in 2023 they won't get close to 500M CF. Tanker rates have been easing up so far in January so quite unlikely right now. For 2023-2025 they have CAPEX requirements for their newbuilds aswell.
Why are shipper valuations quoted in NAV? Seems like just a strange approximation of value, but otherwise mostly meaningless (other than relative value to other firms) given nobody ever sells their ships pays their debt and distributes cash to holders.
Great article Nate. One note about the aframax charters on artemis and apollo voyager; they are bare-boat so company doesn't pay opex and crew the ship so the charters are more accretive than they might seem. Hope this helps.
Appreciate the write-up. I learned a lot! Definitely a risk/reward scenario worth contemplating.
Regarding fees, every now and then they pay themselves a bonus for all the hard work they do. This year it was a 1.0 m which i totally disagree with.
Regarding the 20 year dividend history, the last few years they have been lacking and I find it irritating the MGT keeps touting 20 years of dividends. Length of time doesn't matter, the amount does. Nordic American Tanker (NAT) does the same thing, totally bogus and it loses credibility.
Third, you didnt mention the 20 years of constant asset write downs. Go take a look at annual report and look for the line called impairments. So their pricing policies doesn't cover (residual value risks) the risks of asset impairments in poor markets. I believe they'd rather have a bad deal than no deal at all. don't like the focus in one sector. TNK focus on midsize, DHT vlcc large sizes.
They are all over the place with investments in dirty small med large, LNG, product tankers etc
When they do have an impairment , they stress its non cash...duh thats because the cash has been previously spent in a prior period
Fourth, the transparency sucks as far as I'm concerned. They took the share count from 19.6 m to over 28 m in one year and didn't say a peep about it. Look at quarterly reports. They show avg shares O/s and not actual count and they dont show a detail funds flow statement. Many shares were issued at 8 or lower. Is that good capital management?
Fifth, late reporting of results. They still haven't issued the detailed 6-k for q3 and we are in Feb 2023, wtf!!
They have "lucked out" with a rebound in LNG rates and tanker rates.
Ive been in and out of this name for last 25 years.
The best reason to own it is operating leverage in firm markets. But if we have firm markets other companies will do well too. Today as I write this tnk is up 8 % whilst TNP is 4.5 %so it's lagging
One final suggestion, calculate a FCF to EV rate. You pointed out the ev is 2.5 b. I want to make 20 % min. 20 % of 2.5 b is 500 m . Will TNP do that?
Agreed with all of the above, there isn't much transparency and their long-term charters are straight out bad.
I doubt they can make 500M FCF. Simple FCF calc for Q3 would be 42M net inc+36M in depreciation to 78M in cash flow. Unless markets are very strong in 2023 they won't get close to 500M CF. Tanker rates have been easing up so far in January so quite unlikely right now. For 2023-2025 they have CAPEX requirements for their newbuilds aswell.
Why are shipper valuations quoted in NAV? Seems like just a strange approximation of value, but otherwise mostly meaningless (other than relative value to other firms) given nobody ever sells their ships pays their debt and distributes cash to holders.
Great article Nate. One note about the aframax charters on artemis and apollo voyager; they are bare-boat so company doesn't pay opex and crew the ship so the charters are more accretive than they might seem. Hope this helps.
Alex
True, I wrote that part at the beginning of writing the article before realizing it was a bare-boat, will change it now.
Thanks.