Position:
2,546 shares at $6.75
About $17.2K total.
And before someone says “only $17K?” this is a stupid amount of money for me.
If this goes badly I’m not posting loss porn from my yacht. I’m heading back to the Wendy’s register.
Six years ago WSB discovered tanker stocks, decided boats couldn’t go tits up, and then watched Tanker Gang sink harder than a homemade submergible.
So naturally I bought $NAT.
Either Tanker Gang makes a comeback or I’m six years late to the funeral.
The thesis
NAT says roughly 90% of Q2 is booked around $68K per ship per day.
Q1 was around $47.6K/day.
Operating costs are under $10K/day per ship.
I’m not exactly what you would call a shipping expert, but even I know $68K coming in versus < $10K operating cost seems pretty fucking good.
Rates go up = NAT prints.
Rates go down = just put the fries in the bag bro
Q1 was already strong
$77.5M net voyage revenue
$54M adjusted EBITDA
$46.3M net income
$0.22 EPS
$0.22 dividend
There was a vessel sale or something but underlying business was still strong.
Q2 is where it gets interesting
Q1 TCE: $47.6K/day
Q2 booked: \~$68K/day
That’s roughly a 43% increase.
The boats don’t suddenly cost 43% more to run because customers are paying more.
So a lot of that increase should hit earnings.
My highly regarded napkin math gets me around $0.25-$0.30 EPS.
Could be wrong. This is shipping. Being wrong is basically part of the business model.
Dividend
Current dividend: $0.22/share quarterly
That’s about $560 a quarter for me to spend on gentlemen’s expenses.
The annualized yield looks ridiculous, but this is shipping, not a savings account.
Rates dump, dividend dumps.
It’s basically a floating casino that also transports oil.
CEO is buying too
CEO recently bought another 100K shares around $6.03.
The Hansson family already owns a lot of NAT.
Insider buying doesn’t guarantee shit, but I’d rather see the CEO buying than unloading his bags onto people exactly like me.
The charts and crayons🖍️
NAT is near 52-week highs and above the 50-day and 200-day averages.
Possible cup and handle.
Possible inverse head and shoulders.
If you draw enough lines you can probably find a straight in Hormuz too.
Either way, trend is up.
The bad news is I’m buying near the highs, which means I’ve clearly mastered the WSB strategy of waiting until something goes up before becoming bullish.
What fucks me
Main risk: tanker rates fall. That’s basically the whole game.
Also:
More tankers are being built, NAT has debt, They can dilute, Dividend can get cut, Stock has already run
Q2 could be great and the market can stay regarded longer than I can stay solvent or whatever.
And then there’s geopolitics.
War can increase tanker demand.
War can also create the minor inconvenience of people shooting missiles at your boats.
The real catalyst
Q2 should be strong.
What I really care about is Q3 bookings.
If Q3 rates are still stupidly high, this could have legs.
If Q3 sucks, Tanker Gang gets titanic-ed again.
Targets
Bear: $5.50-$6
Something breaks. I get flamed in the comments and start learning how the Frosty machine works.
Base: $8-$9
Q2 strong, Q3 stays strong, dividend holds.
At $9 I’m up about $5.7K.
Bull: $10+
Rates stay elevated and the market stops treating NAT like buying it gives you an STD.
At $10 I’m up roughly $8.3K, That’s some good cushion
Position
My line in the sand is around $6.50.
Of course it can gap straight through that because the market has never once cared about my risk management spreadsheet.
TLDR
See you on earnings.