Investors like it.
That was the early takeaway from Navios Maritime Partners’ $835m purchase of parent Navios Maritime Holdings’ 36 bulkers as shares of both New York-listed companies shot up in early trading on Thursday.
The pair soared roughly 15% in the first 30 minutes of trading in New York on elevated turnover.
The gains came after Navios Holdings announced the sale of the bulker fleet after the market close on Wednesday, allowing it to head off concerns about paying an $80m bond maturity next month.
Navios Partners has been dealing with a huge gap between its share price and estimates of its net asset value (NAV), with investment bank Jefferies placing it at just 19% of NAV at its recent initiation of coverage on the company.
Thursday’s surge may be at least a start in narrowing that divide, as investors also digested a $100m stock buy-back authorisation that would cover 17% of the public shares float at the trading price when announced.
Navios Partners also announced second-quarter earnings on Thursday that, while slightly below expectations of Wall Street analysts, were robust at $3.84 per share.
The company’s earnings call was largely devoted to the Navios Holdings acquisition, but drew surprisingly little interest from the equity analyst community. Jefferies’ Omar Nokta was the only researcher to ask questions.
Nokta did ask about the $100m buy-back programme and whether management expected moving quickly.
“We are trying to create a more durable NAV,” said chief executive Angeliki Frangou.
She explained that while container ship values declined in the second quarter, and these represented more than 50% of NAV, the fleet-wide NAV actually increased modestly because of gains in prices of tankers and bulkers.
Frangou described the repurchase authorisation as “a tool to achieve that strategy”, although she did not address Nokta’s question as to timing.
The Navios Holdings acquisition creates the second-largest US-listed shipping company, with 188 vessels, and the third-largest US-listed dry bulk owner.
Navios Partners will control 90 bulkers with an estimated value of just over $2bn. Its 49 container ships have an estimated value near $2.8bn, while the 49 tankers are assessed at $1.5bn, according to the company’s earnings presentation.
