Seanergy stock ended last week about 15% higher on increased industry coverage that the company's strategy to build its Capesize fleet is positioning the business to deliver on its promise to provide increases in shareholder value through an expansion of revenue generating opportunity.
Positive comments from SHIP CEO, Stamatis Tsantanis, provided momentum for the stock mid-week, with shares trading at the 72 cent level before closing at 70 cents a share on Friday. Cna Finance first covered SHIP stock when shares were trading at 61 cents on June 6th, and since then the stock has gained much-earned investor attention, as well as a significant percentage increase in value.
While Mr. Tsantanis acknowledges that dry-bulk market rates may remain volatile in the near term, he points to the company's free float growth of roughly 30%, as well as a decrease in ownership by major stakeholder, Claudia Restis, as a contributing factor for continued share price increases based on asset revaluation.
SHIP has positioned themselves to benefit from a new administration in the White House, one that has promised to normalize trade and to increase the competitive landscape for international trade. Regardless of which countries benefit is not of primary concern for companies like SHIP. The real measure of economic growth for shippers gets met through increased tonnage delivery, and SHIP is working to secure an increasing portion of the market.
Since 2015, SHIP has increased its fleet size to eleven ships, focusing on the larger Capesize vessels that the company has been able to secure at historically low cost. To build the current fleet, SHIP spent roughly $270 million, taking advantage of depressed asset values which allowed SHIP to purchase its Capesize vessels at an average cost of around $28 million per ship.
Until the momentum shift last week, SHIP stock has been under pressure, and a notice from the SEC requiring the company to regain a $1 share price did not help. However, investors appear to have taken the notice differently, believing that the CEO will take aggressive and balanced action to remedy the listing covenant. Positive comments by investors also show confidence that Mr. Tsantanis will be able to execute on his strategy, one that focuses on fleet growth with hopes of becoming the Nordic American Tanker (NAT) of the dry-bulk industry.
While institutional investors have shied away from the shippers in recent months, renewed interest in the sector is apparent, with investors nibbling at the most promising of the bunch. And, with SHIP well positioned from both its fleet size and restructured balance sheet, investors may be deserving of additional increases in share value if the company continues to deliver on its multiple strategic initiatives.
With the stock price at the 70 cent level, the market is apparently ignoring the intrinsic asset value in place at the company. Factoring in the emergence of a rejuvenated day-rate, SHIP sits primed for attractive growth throughout the next few years. The aggressive administration in the U.S. appears determined to drive trade, and dry-bulk shippers will be benefactors. Too many value driving propositions exist for SHIP to remain at current levels and investors with an appetite for risk should consider the unrecognized value in the company as an opportunity.
Regardless of how SHIP trades in the coming days, we believe that an upside bias exists in the stock and that the management team will deliver on its regulatory compliance issue. Based on several factors, inclusive of a strong management team, a clean balance sheet, and the likelihood of an increase in shipping rates, the $1 threshold may be met within the next ninety days, representing a potential return of more than 40%. As always, CNA Finance will keep investors up to date on breaking news for SHIP stock.
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