Shipping-related names stay on my radar. I had noticed SFL shares bounce to over $14/sh in trading today (07/23). Then I saw this news item
Company announce another secondary offering - 8M shares, plus possibly an additional 1.2M shares. The 8M shares represents a dilution of about 5.8%
At the beginning of July 2024, the company had announced an order worth $1B for 5 newbuild container vessels with attached charters. There’s usually a down-payment of about 10% before vessel construction starts - figure about $100M, so that’s a ballpark figure of what SFL will likely target with this equity raise.
No SFL position currently.
Had a small SFL position that I closed out in late Dec 2023 for a nice gain
Though the contract backlog may give the illusion of stability/safety, I always remind myself, SFL is involved in the shipping sector
Debt load. Yes, SFL keep paying or refinancing their debt obligations. But, other shipping entities pay their debt down.
Fredriksen-backed. That’s both a positive and negative. If Fredriksen likes his entity, he will reinvest in the company (when GOGL had its major expansion and a share offering to partially pay for the additional 18 vessels, Fredriksen trusts purchased half the shares in the offering)
[Edit: Another way is to provide direct financing to his backed entities e.g. FRO, GOGL, etc. Fredriksen has not done this with SFL ]
BTW, another way one can tell SFL has issues is just check out their last two quarterly Balance Sheet slides. Their Current ratio i.e. Current Assets/Current Liabilities is < 1 – that’s a problem if SFL want to keep adding assets and/or needs to finance something on short notice