• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Markets
  3. / Commodities

Earnings Show Navios Has the Means to Remain Afloat

Shipping company's shares bob back to the surface after falling hard.
By JIM COLLINS
May 25, 2016 | 02:00 PM EDT
Stocks quotes in this article: NM, NM-G, NMM, NNA, GST

Navios Maritime Holdings (NM) shares have been trading as if the enterprise were sinking fast, but this morning's earnings release showed the company is on an even keel. Naval references aside, it's clear Navios has the financial wherewithal to survive the brutal plunge in freight rates for dry bulk ships. NM shares were falling hard into today's earnings release, but the shorts' worst fears were not realized, and Navios Holdings shares have bounced 20% today in a relief rally.

Navios posted EBITDA of $45.4 million for the quarter, a 73% year-on-year increase. The key to analyzing Navios Maritime Holdings is the last word -- holdings. While Navios' dry bulk ships suffered under a first quarter that saw the Baltic Dry Index (BDI) fall to an all-time low of 290, the company's 64%-owned South American Logistics business posted a 35% percent gain in EBITDA for the quarter, driven by strong results from its barging business in the Hidrovia region.

Historically, Navios Holdings has supported its corporate family members -- Navios Maritime Partners (NMM), Navios Acquisition (NNA), Navios Midstream Partners (NAP), Navios South American Logistics -- with working capital support. Also, Holdings has chartered-in boats owned by Partners, a more direct form of intrafamily support.

On this morning's conference call, CEO Angeliki Frangou noted that working capital support was no longer needed by Holdings' affiliate companies. Also, Holdings generated a $14.9 million gain in the quarter from ending certain charter commitments, and many of Holdings' charters of Partners' boats have expired in the first part of 2016.

Simple, isn't it? Well, it never is with Navios, but the key takeaway is that the parent, Navios Maritime Holdings, survived the worst quarter in the recorded history of dry bulk shipping and exited the quarter with $157 million in cash on its balance sheet.

In the short term, Navios Holdings' common shares, NM, are going to be buffeted by a host of factors -- including a commercial dispute with Vale (VALE) over a port being constructed by the company's South American Logistics business and what looks to be a seasonal slowdown in the BDI, fixed at 605 today, down from the recent high of 720, set in late April.

Longer term, however, the business is viable and on today's trading, I've been taking some profits in NM common with an eye toward adding to my position in Navios Holdings' Series G preferred.

Yes, NM-G is my Real Money Best Idea and as of 3 p.m. ET yesterday, but it wasn't looking so hot (note that the quotes on the RM Best Ideas scoreboard are a day behind real time). This morning's release showed that bankruptcy fears at Navios were overblown, however, and even as NM-G shares trade up by 25% today, I think there is still extreme value there at 15 cents on the dollar.

What I've learned in following preferreds through the commodities (and commodity shipping) meltdown is that investors don't care whether dividends are paid or not (Navios last paid preferred dividends in January). No, as with the Series A preferreds of Gastar Exploration (GST) -- which were the subject of my first Real Money column three years ago and have recovered to 35 cents on the dollar today from the February low of 11 cents on the dollar -- investors are using deeply discounted preferreds as a call option on recovery. It's happening in oil, and that is a positive sign for companies involved in any aspect of the commodities trade, including Navios. So, NM-G is still a good buy here.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Collins was long NM and NM-G, although positions may change at any time.

TAGS: Commodities | Markets

More from Commodities

Oil Specs Are All in and Long - Too Much Too Soon?

Maleeha Bengali
Jan 22, 2021 12:00 PM EST

Oil is especially interesting as it is deemed the cheapest. Cheap is cheap for a reason.

What Lies in Store for the Market in the First Quarter of 2021?

Maleeha Bengali
Jan 19, 2021 9:34 AM EST

It's easy to get caught up in the inflation trade, but it's also important to know how best to play that.

Let's Invest in a New Kind of 'ESG'

Jim Collins
Jan 7, 2021 10:00 AM EST

We're casting a wide net to find investment opportunities that are both underappreciated and undervalued.

3 Breakout Candidates Living in the Materials World

Ed Ponsi
Jan 7, 2021 8:30 AM EST

The charts of U.S. Steel, Freeport-McMoRan and DuPont suggest that the surge in their shares may have just begun.

Corn Futures Make a Huge Upside Breakout

Bruce Kamich
Jan 6, 2021 9:50 AM EST

Equity traders should think a bit about the implications for food prices in the months and maybe years ahead.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:04 AM EST GARY BERMAN

    Monday Morning Fibocall for 1/25/2021

    SPX (Long-Term View) The 1/21/21 NEW high @ 3861...
  • 11:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    I discuss price targets in my Saturday column.
  • 07:54 AM EST GARY BERMAN

    Friday Morning Fibocall for 1/22/2021

    SPX (Long-Term View) The 1/21/21 NEW high @ 3861...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login