Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Minyan Mailbag: Will Navios Maritime Sink or Swim?


Anchors are aweigh in shipping sector.

Prof. Zucchi,

Are you still a believer in Navios Maritime (NM) and the sector? Is there any evidence supporting the possibility that Navios is a potential takeover target?

-Minyan Bob


Navios Maritime is up almost 50% since I first wrote about it. Not bad I suppose, until you look at some of its cousins and realize that they're up 60-70 and 80%. Which brings me to the fundies of the entire drybulk space, which are absolutely screaming with both spot and longer term rates making new highs every day. If the current rates stick drybulk shippers can continue to run.

What does bother me about most of these stocks is the rate of ascent they've taken on (for example Excel Maritime (EXM) and Dryships (DRYS)) and the oft-heard argument that these stocks are good buys because they're cheap on traditional valuations. These types of stocks redefine the meaning of cyclical stocks, i.e. highly leveraged names which almost by definition look cheap and cheaper at the top. Remember the homebuilders? Same concept.

Now, I had my ear to the ground in the homies and I knew that what I was seeing could only have been the biggest bubble in the history of modern (and not so modern) finance; and I still was not able to time the end of it! In the shippers space, I rely on data from analysts whom I hold in high regard, but I don't have a first hand feel for what's happening. So I'm not entirely sure of where we are in the cycle. I will note that just about all the stocks I follow have reached or surpassed the Price Targets that those in-the-know were shooting for. NM is the exception, with the $20 PT still some ways away. And I'm not a big fan of the notion of "raising price targets" unless there are truly compelling fundamental reasons.

So, this is a long way of saying that I am not about to fight the move in the shippers, but I'm certainly not looking to start new positions. I've sold half of my NM calls and am holding the other half for free. I'm still long all the stock I initially bought looking to scale out of it when it approaches the PT, or if the fundies start showing cracks.

As for NM being a buyout candidate, I have no insight either way.

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos