Yet, when market panics, all kinds of babies get thrown out with the bathwater. To boot, DAC has fallen 10% today so far, right along with ZIM. This is absurd, as DAC is a more solid play than ZIM, as it has very little exposure to spot rates and none of the ZIM idiosyncrasies around selloffs, special dividends etc.
I had held DAC for a while and sold at the elevated levels recently, as $100 seemed to be fair value in my mind. Flagging this now as we are approaching the $70 level.
J Mintzmeyer’s podcast from Jan - he is even more bullish, so still saw upside then… the core of his argument is still 100% valid
Will likely get commons at the $70 level. And then options on trend reversal, which will probably be when China reopens. It’s crashed through all kinds of support recently:
What applies to ZIM in terms of the shipping climate applies to DAC, so will be posting most of that in the ZIM thread for continuity. But please refer to that for the latest. Let’s share DAC specific info here.
Mintzmyer did a presentation a couple of days ago and he mentions DAC around the 16:40 mark
He was spot on with the shipping market last year and he still seems very bullish on a lot of the shipping stocks.
May get LEAPS after as DAC reports first, then ZIM, so could catch tailwind from the latter. But without having to pay all that premium. The divergence below is to be expected because ZIM has higher beta, but DAC can catch up a bit.
Adjusted net income of $235.3 million, or $11.36 per share, for the three months ended March 31, 2022 compared to $58.0 million, or $2.83 per share, for the three months ended March 31, 2021, an increase of 305.7%.
Looks like DAC has caught the containership bad juju. Despite their $100M share repurchase (market cap of $1.3B…) and locked in revenue and profits for the next few years, it’s fallen 30% in the last month since confirming all the good news. Not to mention 40% from its highs.
Incidentally this also means stops got hit (at $78.27) but I didn’t notice it till now when doing a review of my portfolio.
Not that DAC is affected by these rates since they are locked into their charters, but the Harpex charter index has also been holding steady, so no negative sentiment should be coming out of there either.
Putting limit buy order in for the absurd price of $50, but since that’s just below the 100SMA, might just hit it if market continues to act like Sour Patch Kids.
Matson (NYSE:MATX) on Tuesday said it expects 2Q22 net income and diluted EPS to be $373.3M to $377.9M and $9.31 to $9.42, respectively, helped by higher income from ocean transportation and logistics.
Analysts estimate the company to earn $8.27 per share.
Expects 2Q22 operating income for Ocean Transportation to be $465M to $470M.
Expects 2Q22 operating income for Logistics to be $22.5M to $23.5M
During the quarter, Hawaii container volume decreased 1.5 percent primarily due to lower retail-related demand.
DAC should get some support from this, which, like ZIM, has been seeing some price appreciation recently.
DAC reports on Monday, Aug 01. Has shown decent strength compared to SPY though hasn’t responded as strongly in the last week. SA had this bullish article that recaps well why I like DAC.
In case anyone wants to go in last minute. I’ve put in limit buys for some 8/19 calls that did not get filled earlier.
Price didn’t rise much at all after earnings, and with dividend payments done on Aug 16, this might start falling again soon. Will keep an eye out for puts.
Putting DAC back on a watchlist, to potentially short. As the title of the page notes, DAC is like ZIM in that it deals with containerships, but different because it charters out its ships to folks like ZIM.
We have seen a very clear divergence over the last few months, because leasing rates have stabilized somewhat, while container shipping rates have gone down.
What gives me reason for pause though is the amount of capacity hitting the water over the next two years:
The record container order book, which sees ships contracted at yards in Asia through to 2027, now totals 7.692m teu according to Alphaliner, a figure which is larger than the combined extant fleets of Maersk and CMA CGM, the world’s second and third largest container lines. By July last year, the boxship orderbook had become larger than both the tanker and bulker orderbooks in dwt for the first time, according to Clarksons Research.
…
The orderbook as a percentage of the current fleet stands at 29.5% according to Alphaliner, with a heavy skew towards larger-sized ships.
