# Nordic American Tanker (NAT)



## humble_pie (Jun 7, 2009)

wondering if anyone would care to have a go at Nordic American Tanker (NAT) plus its recent offspring Nordic American Offshore (NAO)?

NAO is very new, so i'll concentrate only on norwegian NAT which does have a history. No earnings but high dividends, which are paid out 100% as return of capital. Money is raised from time to time via secondary share offerings.

fleets of both companes are expanding rapidly, the former as regular tankers (panamas i believe) & the latter specializing in rig supply vessels in the north sea.

the problem i'm having is that NAT's share price decline is nowhere compensated for by those juicy big annual distributions. So a dark view is that NAT is worse than a ponzi scheme. A dark view says it's a trap designed to lure gullible investors seeking high yield; but at the end of the day, all that happens is that the investors lose money while the ships get paid for.

beats me. Is anybody winning here? maybe the shipyards?


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## PuckiTwo (Oct 26, 2011)

Humble, I assume that your investigative mind has found much more than any of us. Saw a reference in one of NAT's press releases to "Suez-Max-Tankers". There was apparently back in 2006 and earlier a "Suez-Max-Tanker-Fonds" issued by Emission house K & Cie. which offered shares on the Austrian investors market back in 2006. In that press release K&C said about themselves that they were/are one of the leading houses for closed funds. It looks as if meanwhile K&C had problems - there is a almost 100 page long thread on a German money forum which I haven't read yet.

Edit: the German forum talked about a number of insolvencies regarding these type of tankers and a number of law suits going on. As far as I could understand "that the panama business (panamaxe) is dead" and that "there were not enough business for this type". Some German shipyards seem to have sold tankers for breakup value.

This may not relate directly to your question but I thought maybe nonetheless interesting.


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## humble_pie (Jun 7, 2009)

thankx Pucki for your comments. One should stay away from shipping companies i think? but they are fun stories to watch.

a few years ago i had an option diagonal in greek dry bulk shipper SBLK. The thing did not do well, however it was entertaining. The company literature warned that it was HQ'd in the marshall islands, where, it solemnly assured shareholders, they could expect severe difficulties in getting any legal complaints against the company resolved.

at some point it began to dawn on me that SBLK itself didn't seem to own the ships. It seemed to be leasing the ships. Ownership seemed to remain in the hands of a few greek gentlemen who had other shipping interests plus an office in piraeus port.

thus i glimpsed the beautiful euclidian geometry at work. Shareholders had put up the $$ to pay for the ships in the hopes of being on board the elevator if & when it would rise in the right direction. Meanwhile the ultimate owners were getting their ships paid for, mostly for free.

dry bulk & tanker shipping, like mister copper, are regarded as very early harbingers of global economic improvement. I had hoped that a norwegian shipping company such as NAT or NAO might be less kinky than some other nations, but perhaps not. In any event i believe the closest i'll come is to look up the Baltic dry index from time to time. If ever seized with an uncontrollable lust to invest in transport stocks, i'm sure that a railco like CNR would be more down-to-earth.

t


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## doctrine (Sep 30, 2011)

humble_pie,

I definitely don't like the look of NAT from an earnings, dividend or chart perspective.

A 5 minute proprietary search methodology of random websites led me to SSW on the NYSE, which has better earnings, dividends and chart. I haven't looked further, but it looks promising. Why don't you take a look there?


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## PuckiTwo (Oct 26, 2011)

humble_pie said:


> but they are fun stories to watch.


and it seems very very risky. End of 2011/all of 2012 German speaking forums reported lots of bankruptcies of shipyards and emission houses. Shareholders did not only lose their investments but in some cases were asked to come up with the shortfall. Law suits are still ongoing.


> I had hoped that a norwegian shipping company such as NAT or NAO might be less kinky than some other nations, but perhaps not.


But are they truly Norwegian? The investor relations contact sits in Monaco - may be the last of Europe's safe tax havens (only if you are a resident/citizen there).
All the news items seem to come from Hamilton/Bermuda.
I could find only very little information about Nordic American on German-speaking forums, only the regular news items (buying a new ship, declaration of dividends, etc. you find also on North American sites. Wouldn't you think if they were a sizeable Norwegian company they would appear in the media? It almost looks as if they don't seem to play a big role. 
All the shipping industry seems to pay huge dividends, even in time of distress - why?



> dry bulk & tanker shipping, like mister copper, are regarded as very early harbingers of global economic improvement.


I did find this: *HANSA Treuhand Shipping Market Report 4. Quarter 2013* (Treuhand = Trust company)
- despite worldwide improved business development continued crisis in shipping
- throughout 2013 charter rates for smaller ships from 5500 - 8500 TEU developed better than larger units (due to more scrap disposal)
- Panamax ships over 4000 TEU suffer from a "cascade effect" they are squeezed out by larger units
- according to analysts from Clarkson the increase in tonnage in 2013 was 5.2% resp. from Alphaliner 5.8% to be seen alongside with container loading of 5%.
- Clarkson estimates for 2014 a plus in Tonnage of 5.2%. And an expected load increase of 6.1%
- according to Alphaliner the capacity of the disengange fleet at the end of 2013 was at 779.000 TEU (235 ships), andthe the level of end of 2012 of 295 ships. The share of larger ships increased noticeable, average size of unemployed ships end December 2013 reached record mark of over 3300 TEU. Since 4th quarter 2008 there is tonnage surplus not known before. Before 2008 load capacity of unemployed ships never reached the 200.000 TEU limit, and it was never longer than 1 year.
- Alphaliner expects increased demand by the end of March 2014 but will not be enough to absorb the inflow of new tonnage. Branch experts expect also 2014/15 mit a difficult year. A lot will depend on the scrap disposal activity.

In regards to the TANKER MARKET
- all tanker categories experienced much improved rates due to seasonal effects, heating period in Northern Hemisphere, increased demand from Far East. 
- Especially VLCC tankers had reported higher revenues. Suezmax tankers benefitted from that as some market participants split the loads as VLCCs were more expensive. 
- Suezmax earned in 4Q 2013 on average 23.800 USD and could more than double their revenues vs 3Q but total revenue 2013 with 15.500 USD did not reach 2012 with 16.9 USD. 
According to OPEC demand in crude oil in 2013 was ca. 0.87 mio barrel/day equal to an increase of 0.98%. Growth results du to demand of non-OECD countires. Demand from China increased by 3.4%, Latin America 3.7%, Middle East 3.8%. Usage in Euro area sank by 1.6%. For 2014 an increase in oil demand of 1.16% is expected. 
- Suezmax segment increased to market share to the detriment of the smaller Aframax which compete around Great Britain and in the Mediterrean-Black Sea area. For 2014 a demand plus of 4.7% and a fleet increase of 2.8% is expected. Aframax experienced in 2013 a demand decrease of 8.1%
Dry Bulk: according to Clarkson research the demand in dry bulk in 2013 grew by 5%, same is expected for 2014. Fleet increase for 2013 estimated 6%, in 2014 an fleet surplus of 4%.

Certainly an interesting business you brought up there!


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