Using Veritas to Construct the "Per…

29-04-2017 Hits:87209 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:81127 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:80969 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:85443 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:81941 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:84129 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:55192 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:83387 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:83128 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:83017 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:89276 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:86991 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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 A few days ago, BoomBustBlogger Stuart made the following comments:

I'd be curious to see where you think GNK fits into the mix. They popped up on a screen so I briefly looked at them. Their latest 10Q has a investment in a company called Jinhui. That company trades on the Oslo bors (ticker JIN) and is 54% owned by a Hong Kong company. GNK values their stake at $200 million based on a Sept 2007 stock price. Problem is that JIN has lost about 90% of its value since that time. I don't short stocks so I just eliminated it and moved on. But might be worth a closer look for subscribers, esp if a write down triggers collateral posting requirements under their 2007 credit facility.

On a broader note, this research note [the latest  shipping company research note] seemed to rely heavily on the order book to current fleet ratio, which would indicate price will not be rising to prior highs anytime soon. But, how reliable is that number? Shipping co's have been canceling right and left and I expect that trend to accelerate as it becomes clear that China will not miraculously boom during a rest of the world downturn. If few of these cancelled ships are completed, then I would expect the order book to current fleet ratio not to accurately predict future supply. For example, with respect to bulk carriers, the Business Times reported recently that an astounding 30% were placed with "greenfield" yards in China. It would shock me if the majority of those vessels (or even a large portion) ever got built. This makes me think that relying on current order book to predict future supply is not reliable and in fact may be wildly off.

We have looked at Genco Shipping, a carrier of iron ore, coal, grain, steel products and other dry bulk cargoes.  Following are some of our observations on the company based on preliminary investigations –

  1. ·         As of September 2008, Genco’s investment in Jinhui stood at $60 mn (short term investments based on NOK 21.70 or US$3.70 and 16 mn shares outstanding) (instead of $200 mn as stated in the comment below). As of September 2008 the investment in JIN represented 3.0% and 7.4% of total assets and shareholders’ equity, respectively.
  2. ·         Since September 30, 3008 JIN’s price had declined 67% in local currency and 73% in USD. Based on JIN’s last closing price of $1.0 the value of investment in Jinhui stood at $16 mn representing a loss of $44 mn (representing 5.4% of shareholders’ equity) for 4Q2008.
  3. ·         To gauge the impact of this loss we have recreated Genco’s balance sheet.  After adjusting for loss of $44 mn, Genco’s BVPS declines to $24.4 from $25.8. The Price-to-book value (after adjusting above loss) is now 0.53x versus 0.50x, previously. Even after adjusting for this loss Genco’s P/B is at a discount to its peers’ which are trading at an average P/B of 0.58x.  (Genco is trading at a discount to its peers based on other valuation multiples as well. Pls refer comp analysis sheet in the attached document)
  4. ·         Over the past one month Genco along with its peers have seen a sudden spurt in their share price (ranging from 60-120%) due to anticipation of increase in Baltic dry index.  Baltic dry index have increased 12% over the past one month after declining 92% since beginning of 2008.  Baltic dry index is currently at 784 (December 23, 2009) versus 8,891 in January 2008.
  5. ·         Despite a 92% decline in Baltic dry index, Genco’s EBITDA margins are strong at 85% (3Q2008). Also the debt position for company is reasonable with debt-to-assets of 0.56x and debt-to-equity of 1.14x.
  6. ·         In addition to this the stock has witnessed a decline of 76% over the past one year (despite a 61% increase over the past one month).

Professional susbscribers may download the Genco Valuation Snapshot spreadsheet here:  pdf  Genco Snapshot (449.5 kB 2008-12-26 08:43:10)

 

With regards to our latest shipping co. research note we had relied on company’s presentation and filings for industry order book.  Although we agree with the reader that shipping orders might get cancelled in the near-to-medium term due to financing constraints coupled with excess inventory buildup-vis-à-vis expected increased in oil production (the reason that drove us to build an alternative scenario in the research note), we continue to believe that prices for VLCC and Suezmax vessels have a downward bias owing to two arguments which were highlighted in the report as well

·         The current overbook-to-fleet is substantially high with overbook-to-fleet at nearly 50%. Even if 50% of these orders are cancelled the order book-to-fleet would still continue to be at elevated levels (25%) which would cause a substantial increase in supply negatively impacting charter rates.

·         Second argument is that even with the existing fleet (assuming there are no additions to the existing fleet) industry is going to have excess capacity due to expected decrease in oil production. OPEC has already announced 4.4 mn barrels per day production cut and is expected to announce further production cuts to bring prices into equilibrium. However with eminent slowdown in developing economies the demand for oil is expected to be subdued. With decline in oil volumes we believe that even the existing fleet could cause excess capacity impact charter rates. 

I want to inform readers who have not noticed that I will be on a light posting schedule for the holidays.  

Wishing you a Merry Christmas, Happy Chaunuka, Happy Kwaanza, and happy holdiays and New Years on behalf of the entire team at BoomBustBlog.com.