If you have owner-operated companies (i.e. FRO or OET/ECO), the discussion becomes pointless. Rewarding shareholders means rewarding yourself as a business owner, which again means you have a large checkbook ready when opportunities present themselves.
The market isn‘t stupid - there is a good reason the differences in valuations exist.
Container lines foolishly over ordered ( directly or via lessors, mostly Seaspan) new building ships as they have done before.
They did certainly shoot their shareholders in their feet. Again.
Capacity additions are not at all due to a wise long term perspective but just herding and/or ego trips.
If there was any sort of wise long term perspective the new building orders would have been paced and spread overtime, together with a full blown project to actually replace industry propulsion technologies rather than ordering “dual” or “ready” engines.
Nuclear anybody?
Given the container line alliances concentration of global capacity and the individual alliance antitrust immunity to plan fleet characteristics and capacity deployment, one would think that there would be room for rational behavior…
With regards to the likes of TNK, TNP, NMM or DAC , it’s true that they might need to partially retain profits to replace fleet and/or to have a rainy day reserve.
But nothing prevents any of them from articulating a coherent capital allocation policy and adhering to it, rather than playing possum.
It’s simply unprofessional to allocate unrealistically low returns to shareholders at a time of consistently high profitability.
Analysts say sh!t things because they want business from the companies and do not have money invested.
Because they say crap at Capital Link doesn't mean it is true.
If you have owner-operated companies (i.e. FRO or OET/ECO), the discussion becomes pointless. Rewarding shareholders means rewarding yourself as a business owner, which again means you have a large checkbook ready when opportunities present themselves.
The market isn‘t stupid - there is a good reason the differences in valuations exist.
Great article and very important for the understanding of some companies management behavior. Thanks.
Container lines foolishly over ordered ( directly or via lessors, mostly Seaspan) new building ships as they have done before.
They did certainly shoot their shareholders in their feet. Again.
Capacity additions are not at all due to a wise long term perspective but just herding and/or ego trips.
If there was any sort of wise long term perspective the new building orders would have been paced and spread overtime, together with a full blown project to actually replace industry propulsion technologies rather than ordering “dual” or “ready” engines.
Nuclear anybody?
Given the container line alliances concentration of global capacity and the individual alliance antitrust immunity to plan fleet characteristics and capacity deployment, one would think that there would be room for rational behavior…
With regards to the likes of TNK, TNP, NMM or DAC , it’s true that they might need to partially retain profits to replace fleet and/or to have a rainy day reserve.
But nothing prevents any of them from articulating a coherent capital allocation policy and adhering to it, rather than playing possum.
It’s simply unprofessional to allocate unrealistically low returns to shareholders at a time of consistently high profitability.
My two cents
If want, go private.