ATCO - Atlas Corp

[lessthaniv]

They have a good model but have only dealt with renters not wanting to pay, what happens when ship renters cant pay is one thing the business model hasnt taken into account.

 

Like you said, at that point I will be long gone so it wont matter much.

 

Myth,

Their "renters" are for the most part publicly traded entities. You go have a look at their financials anytime to ascertain their balance sheet strength. That one of the things that gave me confidence when very few people thought they would see the other side of the credit squeeze.

 

[Guest VAL9000]

IV, I think you're right overall about their charterers being financially sound, but I think you are mistaken with respect to their being public companies.  I believe that only Maersk, K-Line and MOL are public entities and they represent a relatively small fraction of the charter revenue stream.  A majority of Seaspan's charterers are private companies or state-owned businesses such as Cosco and CSCL.  As a comfort, these companies as a group (excepting CSAV) appear to have avoided many of the financing issues that plagued other shipping lines over the past couple of years (CGA CGM comes to mind as an example of a shipping line that was teetering on the brink).

 

A while back, Gerry used to make it a point to mention that Seaspan only deals with the highest quality counterparties in their chartering activities.  How much of this is lip service and how much is actual fact, we can never really know.  I do think that it's worthwhile to note that only CSAV and Hapag-Lloyd ever reached out to SSW during the recent recession to discuss renegotiating charter rates.  HL seemed to be fairly passive about their request.  CSAV was in a more concerning situation but SSW refused this request and has not reported any problems with CSAV since.

 

I have read recently that CSAV and Hapag-Lloyd are both currently evaluating IPOs.  This should help us in evaluating counterparty risk going forward.

 

Another thing I'd like to add is that we're not dealing with just China when we think of Seaspan.  A majority of these vessels are chartered to Chinese liners, but they are not bound to Chinese imports and exports.  A basic example is from Seaspan's Operating Fleet page.  The first vessel there is contracted to CSCL, but was renamed the CSAV Licanten.  Strange, right?  The story is that this vessel was rechartered by CSAV from CSCL.  We're looking at what we could call a "Chinese asset" that's earning 100% of its economic value via trade routes linking South America with North America.

 

The demand for these assets isn't inextricably tied to America's demand for Chinese goods or China's growth engine.  Because they are ships, they can be redeployed wherever the current demand-supply differential is greatest, which won't always be the US-China trade route.  The real demand driver here is the international market for containerized trade.  And if you really want to get enthusiastic about this company, consider the network effect of international trade, i.e. when a country becomes politically stable and economically reliable and installs a container trading port, how much additional trade will occur within the network.

 

[Myth465]

VAL9000 you bring up good points. My issue is some of the smartest guys out say more to come on the world wide recovery and people tend to get excited and overbuild on ships, rigs, and other big heavy capital intensive things. Similar growth arguments were made in dry bulks and crude tankers.

 

Its always different reasons but the same outcome oversupply. We got lucky with slow steaming inmo.

 

Either way these are long term issues. Thanks for the kick in the ass needed to get me back in. I am just enjoying the ride now for now.

[gaf63]

SEASPAN CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

 

Republic of The Marshall Islands   Not Applicable

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

Seaspan Corporation

Unit 2, 7th Floor

Bupa Centre

141 Connaught Road West

Hong Kong

China

Telephone: (852) 2540-1686

(Address of principal executive offices, including zip code)

 

 

Executive Employment Agreement between Seaspan Corporation and Gerry Wang

dated as of March 14, 2011

Transaction Services Agreement between Seaspan Corporation and Gerry Wang

dated as of March 14, 2011

(Full title of the plans)

 

 

 

 

Copies to:

Perkins Coie LLP

David S. Matheson

Danielle Benderly

1120 N.W. Couch Street, 10 th Floor

Portland, Oregon 97209

Telephone: (503) 727-2000

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Securities

to Be Registered

 

Number to Be

Registered(1)

Proposed Maximum 

Offering Price   Proposed Maximum 

Aggregate Offering Price    Amount of

Registration Fee(3)

Class A Common Shares, par value $0.01 per share

 

3,000,000   $17.535(2)   $52,605,000 (2)   $6,107.44

Total

 

3,000,000       $52,605,000   $6,107.44

 

 

(1) Includes an indeterminate number of additional shares which may be necessary to adjust the number of shares reserved for issuance pursuant to such employee benefit plan as the result of any future stock split, stock dividend or similar adjustment of the Registrant’s outstanding Common Stock

 

SSW has just issued another 3 mil shs.  Puts the fully diluted share count up to 95 mil now.

Cant tell from this reg. if this is dealing with Wang's new employment(see reference above to his contract) or if they are building cash for

new builds, either way it seems to me the div. expansion is going to be a long drawn out affair. 

  Even with this dilution there will over $3/ sh of dist. cash

 

[gaf63]

In reading the sec filing from SSW , at first it looked like they are issuing shares, however in reading the 20-f it appears that this filing was

a registration of shares for Wang that are or will be part of his new employment agreement:

 

"In March 2011, in connection with our investment in the Vehicle, we entered into a new employment agreement with Gerry Wang, pursuant to which we agreed to register the shares Mr. Wang earns as a performance bonus or as transaction fees on a Form S-8 registration statement filed with the SEC. Please read “—Employment Agreement and Other Related Agreements with Gerry Wang” for more information."

 

Can anyone shed more light/ decipher this filing, and why the price if part of registration only(tax basis for Wang??)

 

Thanks , GAF

 

 

[Myth465]

VAL you are a pretty good market timer, thanks for the tip. Been very profitable over the last 5 days.

[Guest VAL9000]

Myth, YOU are a pretty good market timer, I've been sitting on SSW for ages :)

[Guest VAL9000]

Can anyone shed more light/ decipher this filing, and why the price if part of registration only(tax basis for Wang??)

 

Gaf, from the S-8:

 

[share price] Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457© or 457(h)(1) under the Securities Act of 1933, as amended, based on the average of the high ($17.93) and low ($17.14) sales prices for the Common Stock on March 25, 2011, as reported for such date on the New York Stock Exchange.

 

Looks like they only use the pricing to calculate the registration fee.  I'm not very sophisticated when it comes to deciphering filings, so if anyone has a better answer then I'd love to hear it.

[gaf63]

Thanks Val,  I missed that,

 

as you say deciphering SEC  filings is difficult

 

Gaf

[Myth465]

Myth, YOU are a pretty good market timer, I've been sitting on SSW for ages :)

 

Good point, LOL a raising tide lifts all....

 

I would sit next to Jim Rogers as the second worst market timer if they put us all in order. I left a few dollars on the table, but needed some cash. Nice to be back in and I dont have to really think about doing anything till November.

[gaf63]

Man who lit the fuse under SSW today, over 700K traded in 2 hrs

[Uccmal]

Has there been news I am missing?  Earnings tomorrow and the stock is tanking today.  I already bought another block of shares as the knife fell.  Getting to my limit.

[Guest VAL9000]

No news that I've seen, just the usual.  SSW moves around a lot.

 

Probably a good buying opportunity given that earnings are coming out tomorrow and will likely be paired with an official confirmation of the dividend increase.

[menlo]

My apologies if this index was posted earlier in the thread, but it's significantly different from the Baltic Dry Index and likely more relevant.

 

http://www.vhss.de/contex_eng.php

 

Bloomberg has a graph of the longer time series as well:  http://www.bloomberg.com/apps/quote?ticker=CTEX2500:IND

[Myth465]

No news that I've seen, just the usual.  SSW moves around a lot.

 

Probably a good buying opportunity given that earnings are coming out tomorrow and will likely be paired with an official confirmation of the dividend increase.

 

I bought more. This feels like last quarter. Move down, decent quarter with good news, then settles, then up to $21. Hopefully we get a repeat. I have to start taking profits on these quick leap wins. Alot of round trips lately with SSW and WDC.

[Guest VAL9000]

I bought more. This feels like last quarter. Move down, decent quarter with good news, then settles, then up to $21. Hopefully we get a repeat. I have to start taking profits on these quick leap wins. Alot of round trips lately with SSW and WDC.

Me too.  I try not to be a market timer, but sometimes I can't help myself :)

[Uccmal]

I bought more. This feels like last quarter. Move down, decent quarter with good news, then settles, then up to $21. Hopefully we get a repeat. I have to start taking profits on these quick leap wins. Alot of round trips lately with SSW and WDC.

Me too.  I try not to be a market timer, but sometimes I can't help myself :)

 

I do this over and over.  I keep the majority of the shares but trade a minority.  Bought a thousand yesterday.  Will sell in increments of 200 starting above 19.  Satisfies the restless side of my nature.

[Myth465]

I bought more. This feels like last quarter. Move down, decent quarter with good news, then settles, then up to $21. Hopefully we get a repeat. I have to start taking profits on these quick leap wins. Alot of round trips lately with SSW and WDC.

Me too.  I try not to be a market timer, but sometimes I can't help myself :)

 

I do this over and over.  I keep the majority of the shares but trade a minority.  Bought a thousand yesterday.  Will sell in increments of 200 starting above 19.  Satisfies the restless side of my nature.

 

Is it weird working with bigger numbers? My sizable position is your trading money lol. Also how are the returns on the trading capital, I have waited for Fair Value on these things and been burned quite a bit. I am thinking about doing this a bit more...

[Uccmal]

 

 

Is it weird working with bigger numbers? My sizable position is your trading money lol. Also how are the returns on the trading capital, I have waited for Fair Value on these things and been burned quite a bit. I am thinking about doing this a bit more...

RE: weirdness - Dont give it much thought.  I try to think with ratios rather than absolutes.  At the rate your learning Myth you will do very well - I am likely somewhat older than you.  How to get rich:  Get returns > 0, and dont die.

 

I have never broken out returns on this type of trading.  I bought and held a bunch of stocks incl. FFH from the mid/late 90s until 2004.  I round tripped a few stocks and just got frustrated.  The biggest hit I made in that whole time was buying when the markets opened after 911.  Thus the trader side was born.  I learned not to take Buffett literally.  Now I make it a process to take some profits well below any mental target I may have.  I also am willing to buy above low targets if the situation is stable or improving such as SSW.  To be fair this is somewhat more lucrative in Canada than the US - we dont have the long term/short term tax differentiation and our capital gains tax is quite low.  With trading fees so low there is nothing stopping anyone from exiting a position and re-entering it later.

[Myth465]

Uccmal thanks for the advice, I plan on trying this going forward. Nothing worse then developing a thesis, researching a stock, getting it right, then being round tripped. I saw with FBK that you were very good at timing your sells. Usually getting out on good news, and buying back on bad news all while holding a core position.  SSW will be the first go around and maybe SD should they recover. From what I see we had decent earnings, but picked a horrible day to report lol.

 

Our taxes make it more complicated, but my Roth / 401k balance is getting decent and I would have loved to some booked gains on a day like this...

 

Heres to avoiding 0

[FlyingArrow]

 

 

Heres to avoiding 0

 

Heres to avoiding death....  ;D

[ERICOPOLY]

I believe people (like myself) find the idea of using retained cash flow to seek new growth as repulsive.  The thesis is to get the stock price up in order to profit on the trade.  Cutting the dividend in 2009 ostensibly to fill in a cash hole has morphed into keeping it low for longer than it needs to be in order to fuel empire building (IMO).

 

Hole filled, dividend back please!  I really don't care if Gerry has nothing else to do.  The reason why I sold 60% of my stock was because I expected them to behave this way once they announced their new joint venture plans.  I take it a lot of other people weren't as pessimistic as me and rode the stock up to 20+ thinking the dividend would soon come roaring back.  Now it's back to slightly below where I made my last sale.

 

The reason why I don't want them to reinvest in new ships is that it's just pointless.  If I want more ships at that yield I can just buy more shares at this price (price is approximately where you buy the existing fleet for the same economics as they buy new ships).  To get that to change, raise the dividend!  Then we can take the money and buy things like HPQ that are better (IMO).

[finetrader]

talk about agency cost.. the biggest expense for a small shareholder.

 

The bigger the size of Seaspan is the bigger Gerry's salary and bonus will be.

[Guest VAL9000]

Hole filled, dividend back please!  I really don't care if Gerry has nothing else to do.  The reason why I sold 60% of my stock was because I expected them to behave this way once they announced their new joint venture plans.  I take it a lot of other people weren't as pessimistic as me and rode the stock up to 20+ thinking the dividend would soon come roaring back.  Now it's back to slightly below where I made my last sale.

 

I might agree, except that they announced the new dividend policy and growth strategy prior to the run-up.  We're still up 12% from that point (over a six week period - annualized, that's a 267% compound gain).

 

There's nothing that says they will use retained earnings for the entire equity portion of their growth strategy.  They are keeping their options open.  If the stock tanks again and their only choice is to cut the dividend or dilute the hell out of the shareholders then they are going to be in a terrible position.  They're withholding the dividend because they can.  When they've determined what the next growth phase will actually be, then they will decide on how to fund this growth.  Ruling out retained earnings today will just cost them the option tomorrow.

 

I'll reiterate this because I think it's important.  Seaspan management spent the past two years fighting for equity because they were caught offside on a market crash.  The market determines the value of your stock and you cannot control it.  Eric, if you're right and $18 is non-dilutive, then they will probably issue stock instead of using RE for equity.  But if they contract out to buy the vessels while raising the dividend and the stock ends up trading at $10 then how pissed off am I going to be?  Really pissed off.  Especially because they already went through this.

 

FT you are right.  Gerry's compensation is tied directly to the deals that he does.  Something like $50mm in stock over the next two years is at stake.  After that, a long-term operations focused CEO with man the helm (whoever that may be..).

 

Like it or not, they've shared the plan.  They are going to grow.  Gerry's vision has long been 100 Seaspan ships.  That's 31 new vessels signed for within the next 2 years.  I expect it to happen.

 

[ERICOPOLY]

Eric, if you're right and $18 is non-dilutive, then they will probably issue stock instead of using RE for equity.

 

At $18 we are getting a cash-flow return of about 20%.  Because the fully diluted cash flow per share is about $3.60 after existing contracted ships delivered in 10 months from now.

 

But you don't get 20% returns on new ships just by financing 100% with cash.  You have to lever them to the hilt just like the existing fleet.  And then there's financing risk, which is the only problem they ran into before (the newbuilds dropped in market price which made their lenders require more cash down payment upon delivery).

 

So what's the point?  Give up 20% returns on the stock in order to get 20% return on new ships?  Meanwhile taking on the same sort of newbuild financing risk that led to dilution recently?

 

Sure, the equity raise might happen at $25.  But based on that they're giving up a 14.4% yield in order to get a 20% one.  Okay, that's accretive but not the world's finest growth rate in terms of what it will mean for cash flow per share.  

 

The only exciting way to grow the cash flow per share is not by share issuance, but rather by retaining the cash flow for new ships.  Thus, my pessimism for the willingness of them to give us our dividend.