Braemar Share Discussion Threads

[hpcg] 03/1/2024 17:24

Very strong finish. I guess there is a buyer that figures they may as well get this distribution as they are prepared to pay this when it is ex-rights.

[masurenguy] 03/1/2024 16:19

Riv - interesting timing by Lightship who don't appear to have been a shareholder prior to that investment. Their shareholding was accrued over a number of trading days since no daily volume has exceeded 300,000 over the past two months.

[1pvh] 03/1/2024 16:13

XD for the 8p final tomorrow nice to see more interest in the stock

[hpcg] 03/1/2024 13:31

Got to love a trade buyer of shares. They'll be more informed than any external shareholder can possibly be.

[rivaldo] 03/1/2024 11:33

Excellent - Lightship SA have just declared a 3.04% shareholding in BMS with 1m shares:



What's intriguing is that presumably this is connected to Lightship Chartering, "one of the world's leading bulk carrier brokers":



A strategic move, something trade or partnership-related, or simply a share in a cheap investment?

In 2020 Lightship lost an entire broking team to BMS:

[florence141414] 03/1/2024 10:07

Just bought back in here for the first time in a while. A few factors have combined in recent days/weeks that have created perfect conditions for middlemen like Braemar. Market is slow to react in my opinion.

[mattybuoy] 01/1/2024 19:11

What a civilised BB!

I am new to the world of shipbroking but it seems like something that we do well, so I will be taking positions here and in Clarkson soon.

[harry davis] 21/12/2023 11:30

Thank you Catabrit, both your feedback positive and constructive is appreciated. If/when I write on Braemar again next year as an update, or if I write on other companies I shall bear these things in mind.

[catabrit] 21/12/2023 11:23

Harry. I read your sub stack post. Just wanted to say that I thought it was a good piece of work. If I had one criticism it is that I did not think there was enough primary research in it (chats with customers, peers and other people in the ship broking industry). I also felt you could have added more colour on the disintermediation risk. Likewise, I don’t think there was enough ‘the industry is analogous to other broking businesses such as IB and commercial real estate and they trade at x, y and z multiples’.

(It’s worth noting the best of these such as CBRE and Colliers are moving towards more recurring revenue streams to booster their stock multiples as the market hates transactional work which is very cyclical.)

But overall, I found it to be a thoughtful and balanced piece of research and I hope you get the outcome you deserve.

[harry davis] 21/12/2023 11:12

Absolutely right, thumbs up. I phrased it as below in my review

"Over time the larger houses have gotten bigger as they have extended their capability set, and as they have proven the best at weathering the usual churn and turn of particular brokers or broker teams leaving to competition or set up their own house. The credibility of a big broker, the scale and broad scope of their offerings are all sustaining competitive advantages, but the industry remains highly structurally fragmented."

The compliance and ESG burden on shipping, as well as the compliance burden around Russia, is playing into the bigger players' favours IMO, and will be a helping hand towards further share consolidation over time. I would argue that the burden to set up a new shipbroker business is the highest it has ever been, and that is partly why you see teams jumping between ships nowadays rather than setting up from scratch. The platforms especially Clarkson has (Sea/ it is called) are real differentiators that have taken a long time to build.

[shalder] 21/12/2023 10:52

re Clarkson/Braemar, there is also the question for any bidder to evaluate what they are actually buying. Typically net tangible assets will be low, and the forward book provides only a measure of support. So what you are really buying are the key personnel, the star brokers if you like. What they decide to do is crucial. The stars can leave and set up their own operation - after all, that is how Braemar came to be.

[harry davis] 21/12/2023 09:32

I am not sure who has already seen it, but there was news yesterday that Maersk Broker management are considering a MBO in combination with third party investor money. That is significant because they are one of the other top 10 industry players in shipbroking, and Clarkson were heavily rumoured to be in discussions to acquire them last year.



This takes me onto your question, Traders, of if Clarkson could buy Braemar. The industrial logic is obvious, there may be a competition question that would arise and I cannot say I am in a position to know whether it would be authorised (although the difference between buying Maersk vs Braemar is only a few percent of the total market share.

I did some back of the envelope maths for whether Clarkson could buy Braemar and what earnings accretion they would achieve.

If we theorise that they pay £140m for Braemar, which would still be well below Clarkson's own valuation but is a reasonably large premium for Braemar
- Clarkson lose £140m at let us assume 3.5% interest -£4.9mln
- but they gain let us say £12.75m of net income before synergies
- assume 2% of sales in further synergies is another £3m, taxed is £2m to keep the maths simple
- Total net income accretion of £9.9m

That is still 12% accretion even when paying £140m for Braemar.

Put that on Clarkson's PE multiple of 13.4X and total shareholder market cap creation would be £133m. So from a financial point of view the deal would make sense, but that is no surprise when Braemar is trading at a rock bottom PE multiple

This sort of a deal probably did not make much sense over the past years because Braemar was a bloated entity with low profit margin activities in many other areas. That Braemar is now streamlined and has a very interesting and high organic growth story in Risk Advisory may change that. But management's view of whether there would be a competition issue of course is the number 1 hurdle if this is a starter or a non-starter. I am happy for Braemar to stay independent but if Clarkson did an all cash or a cash and shares deal for Braemar, I wouldn't mind that if it let me access the upside through Clarkson instead. This is all theoretical of course, but as I discussed in my lengthy review, shipbrokers have not been scared of large scale deals, Clarkson included!

[grahamburn] 20/12/2023 18:13

Re Traders 3064. Cannot be emphasised too much that each and every option exercise results in a tax bill. If all the shares are kept then the tax has to come from their own pocket which is rather self-defeating.

Over many years watching these option exercises, I cannot remember a single one where the director/manager has kept ALL the shares, save perhaps for when the number of shares is very small.

The second relevant comment is that if options are NOT exercised in an accordance with the original terms, then they are forfeited forever.`

[harry davis] 20/12/2023 17:54

Red Sea crisis: Markets spike following Houthi missile attacks as concerns grow over impact on global supply chains
20/12/2023

Latest data from leading industry analysts Xeneta shows spot rates in the ocean freight shipping market spiked by 20% since Friday after major shipping liner companies announced they are avoiding the Red Sea amid the attacks by Houthi militia.

"For example, Maersk has stated it does not know when it will be safe to sail through the Bab-el-Mandeb Strait and CMA CGM Group has issued a notice of Force Majeure, which perhaps suggests they do not believe this situation will be resolved in the immediate future.

“We may also see this impact current negotiations between shippers and ocean freight carriers for long term contracts lasting the duration of 2024. Shippers may feel a level of concern that long term rates could follow the spot market and increase dramatically as a result of this crisis"

[tradersof2003] 20/12/2023 17:15

Its nearly all option exercises and sales of those exercised shares and they'll be facing some fat tax bills.

Clarkson will continue to outperform this

[catabrit] 20/12/2023 16:48

It can be hard to gauge sales. He might have a need for liquidity as he could be buying a new house or paying off a mortgage that is about to reset at a higher rate. But on balance I agree that over £1m of share sales at a 7x PE is hardly encouraging. You want to align yourself with a management team betting the ranch at 7x PE.

[cs44] 20/12/2023 16:22

Not a great vote of confidence in the prospects of the share price when directors offload plenty at 272!

[tradersof2003] 20/12/2023 10:46

I prefer CLarkson

[mayojames] 19/12/2023 20:50

Someone who did it rather talked about son³

[studentinvestor13] 19/12/2023 16:19

What happened is someone took out the 125k buy order at 273p that I talked about earlier with a sell .

Now someone has slapped a hefty new 135k buy order on the books at 270p

Fun and games. L2 is great to see the order book

Clocking off for Xmas now for real ;0). MERRY XMAS

[harry davis] 19/12/2023 09:36

It's a bit illiquid at present in the run up to Christmas (not uncommon across the market), and the real spread is 268-274p now, just like yesterday the real spread was 273-282p. The 282p close wasn't 'real' so to speak.

Better off seeing where it finishes trading at the end of the day on a spread basis, rather than where these auction trades move the share price

A shameless self plug for any newbies in the background

[deadly] 19/12/2023 09:32

So why the drop today?

[studentinvestor13] 19/12/2023 09:17

8p exdiv confirmed for 4th Jan. Merry xmas and new year all im clocking off

[mayojames] 18/12/2023 21:30

Correct hpcg - fact is the best brokers builds a relationship with shipowners much stronger than with the broker company however stay with the company rather than a direct broker link due to the scale and depth of the company. However if the broker moves company the shipowner will usually move with the broker.When I ran some marine companies I took this into account a bonus time.It's just a reality of the business model and if played well we all win

[hpcg] 18/12/2023 19:30

Harry - indeed, for people businesses it is all about pay. There isn't any other cost! You either accept that or invest elsewhere. It is the same for recruitment, law, advertising to name a few. I suspect it is not well understood here, like it is with recruitment. The flip side is that when times are harsh cost is easy to remove.