Golden Ocean (GOGL) was one of the ideas suggested as a Ho Ho Hohum idea for 2022.
The short write-up I did for GOGL–
3. Golden Ocean (GOGL)
When I was considering this pick, shares were trading under $8/sh. Based on what GOGL had booked Q4-to-date, GOGL should provide a decent Q4 2021 payout. After that, one quarter at a time. The dry bulk vessel deliveries are light in 2022, so little pressure on the supply side. GOGL sold two modern (< 15 yo) vessels during Q4 2021, and management suggested that with the right conditions, GOGL could prune its fleet further. Among 81 owned vessels, only 6 vessels were delivered in 2010-or-earlier. Trimming the fleet would thus likely be due to GOGL management being wary of an individual vessel’s future earning potential. In that sense, pruning the fleet is a way to extract value on individual assets.
For 2022, the company has a strategy to deal with Q1 (typically, the weakest quarter of an annual cycle)
https://discussion.fool.com/ho-ho-hohum-ideas-for-2022-35008817…
Well, Q4 2021 results were announced last week (2/16/22).
Both impressive and scary.
Impressive:
- Best quarterly result in the company’s history
- Best year in the company’s history
- Time charter equivalent (TCE) across the entire fleet $35 256 daily for Q4 2021.
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#3 translates to net margins > 53%
and that leads to the scary part - GOGL mgmt know that (historically) Q1 is typically the weakest Q in a cycle. So, why have they opted to pay most of the Q4 free cash ($181M of $203M) out as a dividend?
That’s part of what I referred to as “Fredriksen risk” in another thread.
I can understand the enthusiasm. The supply of new dry bulk vessels does not seem out-of-whack with replacement, plus some growth. In addition, there’s an emissions standard taking effect in 2023 that likely bodes well for dry bulk shipping
https://ml-eu.globenewswire.com/Resource/Download/4cff2e30-1…
GOGL shares bounced and briefly touched $13/sh today (2/22/22).
The last 13 months, I have mostly accumulated GOGL shares. My purchases have a range of price points (under $5 to $11.30/sh).
The overall stock market has not been happy YTD.
Decisions, decisions?
Today’s behavior seems to suggest there’s a momentum crowd hopping on. Or, maybe its a yield chasing crowd. So perhaps it might be smart for me to lock in some GOGL gains soon.
FWIW, @ $13/sh, the P/rev ratio is 2.17