Steven Tananbaum is going long American Shipping Company (OTCMKTS:ASCJF) (Norway:AMSC), which trades publicly in Norway. Tananbaum posted his bullish thesis on American Shipping Company on an investor forum, Harvest. This forum has recruited some big names in the hedge fund industry in a short period of time – Kyle Bass posted on Harvest in December where he revealed his long bet in General Motors Company (NYSE:GM).
GoldenTree is one of the bigger credit funds
GoldenTree Asset Management was founded by Tananbaum in 2000 and can be categorized as a credit firm, using a somewhat similar approach to managing money as Canyon Capital and Oaktree Capital Group LLC (NYSE:OAK). Tanabaum may not be one of the hot hedge fund managers, but manages more money than the more popular ones. GoldenTree Asset Management has $20 billion under management which is distributed in credit hedge funds, special situation, long-only/high-yield strategies and in funds exclusively managing CLO/CDOs. Through the end of August, the flagship GoldenTree Master Fund was up 14.4%, according to Pension & Investments.
GoldenTree estimates enormous upside
AMSC currently trades around 37.9 krone in the Norwegian market. GoldenTree expects that the stock will double over the next two years. At present, the stock has 77% upside and can be worth 70 krone based on a 2015 FCF yield. American Shipping Co (OTCMKTS:ASCJF) is registered under the Jones Act Trade of 1920, where spot rates hit a high of $99,000/day in 2013. If these rates rise to $100,000/day, AMSC’s stock could trade at 250 krone, says Tananbaum.
Tananbaum explains that American Shipping Co (OTCMKTS:ASCJF) is a good takeover target and should be acquired by Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ) as it exits bankruptcy. AMSC operates 10 tankers which are leased to Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ). This way OSG would be able to fully profit from the vessels, and this would create value for its shareholders.
GoldenTree believes that the company is adequately positioned to benefit from the growth in shale oil in the U.S, as its vessels are used for transporting oil and oil products between ports. Charterers of these vessels include large oil companies like BP plc (ADR) (NYSE:BP) (LON:BP), Royal Dutch Shell plc (ADR) (NYSE:RDS.A) (NYSE:RDS.B), Tesoro Corporation (NYSE:TSO), Chevron Corporation (NYSE:CVX) and Phillips 66 (NYSE:PSX).
Imperial Capital also bullish on AMSC
Imperial Capital, an investment bank, started coverage of American Shipping in November with an Outperform rating. Their analysis estimated a price target of 55 krone over a 12 month period. Although they estimate a lower upside to the stock, Imperial’s analysis mirrored that of GoldenTree’s. Their analyst, Andrew Casella said that AMSC is a likely takeover target for OSG and an acquisition would only be logical. Casella said that the company generates ample cash and has remained profitable even through the tough times in Europe.He valued AMSC’s tankers at at $1.13 billion, which amounts to $113mn per ship.
Join Harvest to read Steven Tananbaum’s full thesis.