Tufton Assets Share Discussion Threads

[skinnypope] 07/11/2024 12:06

I don't disagree re Trump and the potential poor sentiment for trade and Tufton. However it is very easy to overstate this point. Looking at WTO data:

1. USA in 2023 was 13% of world imports, and 8% of exports. If US switches off trade completely (which they aren't, they are just going to tariff some of it), there is still a huge market.

2. During the last Trump term and his tariffs, global trade actually GREW by ~25%

Shipping rates and indices all ended up higher over his term in office (albeit C-19 pushed prices up at the end of 2020 to early 2021).

I'd also go out on a limb and state that I doubt his conviction on a lot of the tariff pledges, and I doubt he can go any further than the ones he's already announced, given he has been elected on an anti-inflationary platform and trade tariffs are de-facto inflationary.

[craigso] 07/11/2024 09:29

Thanks for the insight.

I totally agree that in the absense of Trump noise, this fund would be a keeper. Good, well-covered dividend with the occasional capital return on top...

But unfortunately the NAV, and the reduced discount resulting from SHIP's capital return policy, is reliant on the secondhand market for ships remaining reasonably strong. If sentiment regarding global trade / shipping goes sour, I can't see that market remaining decent. So we'd see both a reduction in NAV and a likely increase in the discount for the traded funds from the negative sentiment.

Definitely one to keep an eye on and I can understand some people planning to hold. But I think it's more likely the share price goes back down to $1 than goes up to $1.50, so the yield isn't high enough to compensate...

[skinnypope] 06/11/2024 14:13

I’ve been pondering the holding I have here for a while. Here are my conclusions.

1. This fund is criminally underfollowed. NAV per share grown from $1.00 to $1.616 in 5 years, (including the terrible C-19 era) with a very progressive dividend and buyback policy. Cherry on top is the capital return policy.

2. Headline NAV discount at 21% improved from low of 27% at FY23 [but still well shy of the 1 – 2% until 2021]. However, I think it’s interesting to strip out the cash and “residual assets” balances in the SPVs to get the underlying vessel NAV discount, which is now at 26%, versus the low of 29%. In other words, the discount hasn’t yet narrowed as much as the headline suggests.

3. Within the NAV is $36m of negative charter value, $27m of which unwinds over 12 months. Ceteris paribus, the NAV will automatically be $0.06 higher next year.

4. The dividend is well covered at x1.6 for next 18 months, driven by the 11.5% yield. This Q3 average yield dropped, but this was due to the renewed charters on Golding and Orson at “only” 20% yield (versus ~24% previous), but which also lengthened the average charter to 1.6 years (from 1.3). In other words, SHIP have sacrificed some yield to lengthen the portfolio and secure the dividend.

5. A lot of bulker charters ended in Q3/Q4 this year, about which SHIP have been reasonably quiet. The ClarkSea index has been dropping (from spectacular highs though, it must be said), suggesting the highest charter rates might be behind us. This suggests the average yield could drop further if/when these are renewed at lower rates – however the average yield needs to drop below 8% for the dividend to be uncovered, which can’t happen given the existing book of charters until at least 2 years in the future.

6. The Clarkson NewBuild index remains incredibly high, almost at the highs of 2008. The charter-free element of the NAV therefore remains very well supported.


So what does all this mean? I see two paths from here:

1) The near term maturing charters are rolled over at attractive rates, lengthening the book. This may sacrifice some yield, but the dividend is well covered for years in the futures.

MY TAKE: A good outcome for income seekers, however market sentiment may turn as the Trump tariff fears take hold and future charter rates fall. NAV may be stable / decrease slightly, but sentiment could drive discounts wider. Overall, this makes the stock a HOLD if you have it and like income, but not a strong buy for a new investor.

2) If the new charter rates are not attractive enough, then use the strength of the vessel demand market to sell some more assets. Cash proceeds used for more capital returns at NAV. Possibly even put the fund into wind down, with the longest charters only 2-3years.

MY TAKE: Not so good for income seekers as assets are sold and income drops, but a big tailwind for the share price as the discount disappears. I feel this may be the more likely outcome, so I am holding here and may buy more on weakness.

[craigso] 06/11/2024 10:23

Disappointed to have to sell out of SHIP this morning. But it looks to me like there's more downside than upside for the next few months / years...

[panshanger1] 04/10/2024 12:53

ST reiterated buy rec in l/C today I noticed

[craigso] 04/10/2024 11:57

Topped up last week at $1.30. Spent awhile going back and forth whether to top up Taylor Maritime instead. (wider discount to potentially narrow)

Got to keep an eye on the US elections though. Trump's threatened tariffs (and inevitable retaliation) cannot possibly be good for global trade. i.e. shipping.

[lord gnome] 03/10/2024 06:45

Nice charter. Should keep the income rolling in to pay the dividends.

[lord gnome] 16/8/2024 12:14

I'm with ii and my account holding has been adjusted to reflect the shares being redeemed. I have just bought back an equal number to maintain my holding. I am happy to take the profit from selling at 1.55 and buying back at 1.32.

[skinnypope] 16/8/2024 10:44

Can anyone trade this stock today? AJ Bell haven't updated my holding after the redemption yesterday and aren't quoting the new ISIN.

My workings are that the new share px should be $1.303 now it is trading ex-redemption, so if the price really is unchanged at $1.32 that's a good outcome.

[papy02] 08/8/2024 19:54

Questor/ Citywire (Gavin Lumsden) tip

[lord gnome] 18/7/2024 18:23

Share price is responding as the wind-down proposals gain traction. Nice.

[ntv] 10/6/2024 18:36

Maybe some news/update tomorrow from the EGM

[lord gnome] 22/5/2024 09:18

Moving up steadily. No spike so this should be sustainable. If we get close to nav at 1.40 I might be tempted to bail out. With the tender, it might be profitable to buy back whatever they take off me and pocket the difference.

[rimau1] 21/3/2024 17:15

Results yesterday made good reading and covered today by ST in the IC so we could get a decent move up tomorrow

[lord gnome] 08/2/2024 15:48

Thanks for the link.

[zho] 08/2/2024 15:16

>>although i don’t have access>>

You should be able to access

[rimau1] 08/2/2024 14:14

Tipped in the IC Alpha today although i don't have access, this was off my radar so i have bought some, the economics for shareholder returns seem compelling! 9% dividend, a possible capital return (based on the recently announced ship disposals i guess) and a 25% discount to BV in a structural growth market.

[valhamos] 17/1/2024 11:20

Yes - an excellent update, the company has performed and managed risks well over the years. Very pleased with the increase in dividend and the strong investment outlook with realisation then starting in 2028.

[lord gnome] 17/1/2024 08:55

Humdinger of an update this morning. Dividends increased to 10cents per share, nav up to $1.45 and a very possible substantial special dividend to return some capital. Just had to buy some more. RNS reads as though they are already planning to wind up the trust in 2027, in which case we could see substantial capital returns in due course. Lovely.

[valhamos] 08/1/2024 07:55

Hindsight - the fair values of the Company's investments in the SPVs will be net of any debt. So how useful would information on a consolidated debt position - gearing, fixed/floating proportion etc - be when the Company is not liable for the debt in the SPV?

[hindsight] 07/1/2024 18:44

Thank you for the replies Valhamos
The debt situation being so opaque is not useful and contributes to the discount level as no one knows the terms, ie size, floating, fixed, covenant levels, etc

[valhamos] 05/1/2024 21:29

Hindsight - The Company fair values its investments in the SPVs and is classed as an investment entity so does not produce consolidated accounts. There is information in the IPO Prospectus (page 5) on borrowing and gearing policy. Any borrowing at SPV level is without recourse to the Company or other SPVs.