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Prince Navios?: 8.5% Distribution Yield Covered More Than 4x Last Quarter

Published Sun, 10 Mar 2019 18:22:33 -0400 on Seeking Alpha

Navios Maritime Partners (NMM) generated enough operating cash flow to cover their 2¢ per quarter distribution more than four times over last quarter. An 8.8% distribution yield covered more than 4x is extremely attractive (DCF yield = 36%). As are shares trading at less than 1/3 estimated NAV value (shares 90¢, NAV $2.91).
I only wish I could stop the story there; it would be a fairytale investment. Unfortunately, such things don't exist in real life. Instead we need to ask ourselves just what kisses from Mrs. Frangou (CEO of Navios family), are necessary to turn Navios into a prince of an investment?

The Warts:
Navios Maritime Partners (NMM) had a weak Q4 with TCE and EBITDA down about 27%.

Source: NMM Presentation
Next quarter is likely to be even weaker.
Vale (VALE), an iron ore producer in Brazil had a dam break which killed at least 179 people and caused it to shut down production at mines with similar tailing dams. This in turn has caused a significant reduction in iron ore being shipped from Brazil to places like China (estimated are a 10% reduction in total production). Since the Brazil to China route is a long haul this reduces ton-mile demand for Capesize dry bulk even more significantly, and trickles down to smaller Panamax dry bulk ships as Capesize ships get repurposed. As a result, Capesize and Panamax Dry Bulk shipping rates are down about 60% and 40% respectively from this time last year with frankly no one really knowing when... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
NAVIOS MARITIME ACQUISITION 7.07   0.0 -5.12 1.20 17.02
VALE 12.17   18.7 0.65 0.00 6.74
NAVIOS MARITIME 4.90   0.0 -17.60 0.00 0.00


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