I'm Buying OCNF - OceanFreight Inc.

[ChuckD]

OCNF PR

Earnings release Feb 22 CC on the 23rd

http://www.oceanfreightinc.com/press/ocnf020810.pdf

[schwi105]

hmm....earnings release run-up prior to?

[Vex]

hmm....earnings release run-up prior to?

Remember that's what we all thought last quarter, and the run-up never really came

[ChuckD]

They put out a PR very similar to today's on Nov 3, the stock was as low as .93 that day and traded as high as $1.15 on the 11th after earnings. A 24% upside (if you hit it perfect) I agree not spectacular, but better than a sharp stick in the eye.

[wy3134]

yea action didnt start till a couple days after the q3 results were announced

[ChuckD]

The only estimate I can find expects them to report a loss of .01 a share.

[ChuckD]

Schwi105 and Vex, after thinking on OCNF, I don't really expect very much of a "earnings" run-up, I still only have a few thousand shares
so unless it goes to .95 or so before earnings I will hold through and just buy more if they disappoint.

[schwi105]

I will watch her bleed for a couple days yet....if it runs, I will be able to live with myself and buy more....um....copper or something of that sort.

D

[ChuckD]

No bleeding today, up almost 9% woot !!! lol

[Poldermol]

Personally I think OCNF is one of the worst in shipping sector. Fleet is very aged compared to competitors.

[Superfly]

Personally I think OCNF is one of the worst in shipping sector. Fleet is very aged compared to competitors.

You must be in agreement with me and Spinner...it is a complete dog. Shhhhhh.....don't tell Chuck and Trants and Sawri that though

[ChuckD]

Personally I think OCNF is one of the worst in shipping sector. Fleet is very aged compared to competitors.

Agreed, thats one reason why they are .75 and not $30




Our Fleet

DRY BULK FLEET Vessel Vessel Type Acquired Year Built DWT
Austin Panamax 7-Jun-07 1995 75,229

Helena Panamax 30-Jul-07 1999 73,744

Pierre Panamax 7-Jun-07 1996 70,316

Topeka Panamax 3-Aug-07 2000 74,710

Trenton Panamax 5-Jun-07 1995 75,229

Robusto Capesize 19-Oct-09 2006 173,949

Partagas Capesize 30-Jul-09 2004 173,880

Cohiba Capesize 9-Dec-09 2006 174,200

Augusta Panamax 17-Dec-07 1996 69,053

TANKER FLEET Vessel Vessel Type Acquired Year Built DWT

Pink Sands Aframax 6-Dec-07 1993 93,723

Tigani Aframax 10-Oct-08 1991 95,951

Tamara Aframax 7-Aug-08 1990 95,793

Olinda Suezmax 17-Jan-08 1996 149,085

DRYBULK CARRIERS TO BE ACQUIRED Vessel
Vessel Type Year Built DWT

Montecristo Capesize 2005 180,263

[Vex]

I find it interesting that their 4 largest vessels (once they acquire the Montecristo) are also the very newest vessels in their fleet (all built past late-2004). They will likely weed out the older ships eventually, and replace them with higher volume ones. My thoughts are that this will certainly maximize efficiency down the road.

[science]

I find it interesting that their 4 largest vessels (once they acquire the Montecristo) are also the very newest vessels in their fleet (all built past late-2004). They will likely weed out the older ships eventually, and replace them with higher volume ones. My thoughts are that this will certainly maximize efficiency down the road.

Actually their tankers are among the oldest vessels in their fleet, but if I remember correctly they are all double hull vessels, therefore they are not due to be decommissioned in 2010, which is instead going to be a problem for some other operators. So at least the tankers can be easily contracted for quite some time, no need to replace them.



EDIT: not 100% sure all 4 their tankers are double hull, but at least the 3 which are under long term charter, I should check, maybe someone else has this info and could post it ?


EDIT 2: "Our fleet includes four double-hull crude oil tanker vessels (three Aframaxes and one Suezmax). Two of our Aframaxes are employed on time charter agreements and one Aframax and the Suezmax are employed in separate spot market pooling arrangements."

I found the info in their last F3. Sorry about the confusion, I don't follow OCNF that closely anymore !!

[Eric]

chucky~ row row row your boat...jump and jump as long it's not sinking i am glad =D

[PW]

Personally I think OCNF is one of the worst in shipping sector. Fleet is very aged compared to competitors.

Fellas, I help run a trucking fleet of about 55 trucks. Granted I understand that comparing trucking to shipping is like comparing "apples to oranges" but I believe the same concept applies as far as maintenance is concerned.

Many of our trucks are considered "outdated", however at my employer we stress maintenance of our vehicles. Our technicians/mechanics are told to fix and repair everything whenever our trucks come to the shop. We do not operate with a "give it a temporary fix & get it back on the road" mentality. But I am speaking for my company, I have no clue what the maintenance program is for OCNF. Just keep in mind that maybe we shouldn't be knocking them for an old fleet without knowing the full details of their maintenance operations. But this is only my opinion & I'm a peon.........hehehe

My point is that I would send any of my trucks from Atlanta (my location) to any city in the US & not worry about my trucks breaking down from being outdated. I trust my 2001 Peterbilts as much as I trust my 2009 Peterbilts.

PROPER MAINTENANCE IS KEY!!!!!!

Not to mention the fact that once you have the trucks "paid for", the profits really increase.


Edit: I was thinking about my post & had some additional thoughts (scary...I know). Maybe Science is better suited to answer this question b/c she seems to really know/understand the sector. Is there something out there that shows the dependability of the carrier(s)? If so, will it show how many "late deliveries" OCNF has made? If they have a high rate of being late, it could be due to the outdated fleet breaking down. Just a thought........

[Poldermol]

Agreed, but if you look at the latest sellprices of vessels like they own, their ships on their balance are 30-50% overpriced!

You just cannot book a 15 yo ship at 40M USD, while the last sellingprice of an identical one was 18M...

[science]

Many of our trucks are considered "outdated", however at my employer we stress maintenance of our vehicles. Our technicians/mechanics are told to fix and repair everything whenever our trucks come to the shop. We do not operate with a "give it a temporary fix & get it back on the road" mentality. But I am speaking for my company, I have no clue what the maintenance program is for OCNF. Just keep in mind that maybe we shouldn't be knocking them for an old fleet without knowing the full details of their maintenance operations.
Not to mention the fact that once you have the trucks "paid for", the profits really increase.

Agreed, but if you look at the latest sellprices of vessels like they own, their ships on their balance are 30-50% overpriced!

You just cannot book a 15 yo ship at 40M USD, while the last sellingprice of an identical one was 18M...

I believe you are both very right here.

About maintenance: in the shipping sector it is regulated and is called dry-dock / docking time. Each vessel must undergo a minimum dry-docking time within a period of five years. This ensures ships at sea are safe.

The valuations of ships are troublesome these days. They went sky high during the past commodity bubble, and allowed shipowners to sell very old vessels at hefty profits, after using them for more than 2 decades. I doubt newbuilds' prices can go back that high any time soon, due to oversupply.

When OCNF went public, their intent was to acquire old vessels to maximize profits (low debt, relatively high return, exactly what PW is referring to) and they distributed a hefty dividend to shareholders.

But the model proved volatile and unsustainable, with the crisis daily charter rates collapsed and very old vessels are less in demand and fetch lower rates than newer ones.(because creating potentially more problem to charterers).

So I see how they are trying their best to renew their fleet, meanwhile it has become a problem to get rid of very old vessels, some have no choice but to be sent to the scrapyard. It may not be the case for OCNF, but the good sales seen in the past are gone.

As I was mentioning the 4 tankers create no problem, no matter what their valuation is (except it should be correctly reported in their balance sheet !!), because they comply with the latest safety standards, and should be very easy to find new contracts for them. Not sure this can be said for their oldest drybulk vessels in need of new charters, here age will matter. But let's not forget Cardiff is the manager of their fleet, very experienced.

[science]

Edit: I was thinking about my post & had some additional thoughts (scary...I know). Maybe Science is better suited to answer this question b/c she seems to really know/understand the sector. Is there something out there that shows the dependability of the carrier(s)? If so, will it show how many "late deliveries" OCNF has made? If they have a high rate of being late, it could be due to the outdated fleet breaking down. Just a thought........

Hi PW,

I saw your question after posting something already above.

The short answer is: none.

The long answer: OCNF has its vessels contracted under long term charter agreement. This implies that the shipowner provides vessel and crew. The crew operates the ship, but is under the command of the charterer. The charterer is also responsible for damages to the vessel in the event of, for example, ordering to ship a cargo under extreme weather conditions.

The charterer decides when to load and when/where to unload their cargo. If there are port congestions the vessels queue outside the port, waiting for their turn to unload, this is often the case in high season, like Autumn, high season for coal, late summer for grain etc. If the congestion is substantial it's bad luck for the charterer, they'll need more time to ship all their cargo, but none of this will be charged to the shipowner.

With these long term contract also fuel costs make no difference to the shipowner, because they must be paid for by the charterer. Maintenance however is a shipowner responsibility, but vessels are generally readied before they are assigned to the new charterer, this shows in the balance sheet as smaller number of days under contract in a given quarter.

[ChuckD]

.80 woot !!!!!! lol