Some 17 months after first emerging as an activist investor in Navios Maritime Partners, “disgruntled” Ned Sherwood is back and seemingly searching for new adjectives to express his frustration with leader Angeliki Frangou.
The veteran US-based finance man is out with a new open letter to Frangou and the Navios board, in which he repeatedly mocks the chief executive’s oft-stated expression that she is “pleased” with the company’s performance.
Sherwood is so not pleased with the New York-listed vessel goliath’s stock price and return of capital to shareholders that he is urging fellow investors to contact him at “Notpleasedwithnmm@gmail.com” — an address that includes the Navios ticker symbol “NMM.”
Sherwood is even turning to the movies to find new ways to express his ire, invoking a famous line from the 1976 classic Network.
“I call on unitholders who are not ‘pleased’ to tell Ms Frangou and NMM’s Board of Directors that ‘we are mad as hell and not going to take it anymore!’”
Navios management did not immediately respond to a TradeWinds request for comment on Sherwood’s latest broadside.
With a fleet of nearly 200 vessels including bulkers, container ships and tankers, Navios Partners is the largest New York-listed fleet by ship count. But it is well down the list in market capitalisation at about $750m, and this gets to the crux of Sherwood’s continued complaints.
Navios Partners shares were trading below $25 on Tuesday, which as Sherwood notes is but a fraction of its estimated net asset value as determined by investment bank Jefferies ($117.60) and Value Investors Edge ($99). The discount would appear to be the largest among major US-traded shipping stocks.
Sherwood first emerged as an activist investor and complained about Frangou’s stewardship in July 2001, when he held a 5.8% stake. Subsequent equity sales by Navios reduced Sherwood’s holding ratio below 5%.
However, Sherwood said he had recently bought more Navios Partners stock and pushed his stake back up to 5.4%, thus requiring a new filing with US securities regulators while giving him a public platform to blast Frangou’s leadership.
Navios Partners shares were trading at $31.43 on 3 September 2021, he said. The shipowner has since reported $32.49 in cumulative earnings, yet it is trading today below the $25 mark — a drop of 23%.
“This decline has only been slightly ameliorated by eight 5-cent quarterly dividends totalling 40 cents — representing a measly 1.23% of aggregate earnings during this 2-year period,” Sherwood wrote.
To the 40-year financier who lives in Connecticut and Florida, there can be only one reason for Frangou to be pleased: millions of dollars in “related party fees” going from public Navios Partners to Frangou’s private companies in the form of management fees and commissions for sale-and-purchase activity and operations.
Navios Partners has in the past been reluctant to comment directly on Sherwood’s attacks.
An exception came last May in a statement from chief operating officer Stratos Desypris.
“We are guided by our stakeholders’ long-term interests and focus on total return,” he said. “Our goal is to do this by compounding our earnings potential. I also note that management’s interests are aligned with the long-term interests of our stakeholders, as it owns about 7.5% of the equity in NMM.”
Sherwood acknowledges that anti-takeover provisions in Navios bylaws make it all but impossible for a disgruntled investor to effect the removal of management or board members. But he has a list of “requests” nonetheless:
- Remove anti-takeover provisions from the bylaws;
- Merge Frangou’s privately held ship managers into the public company;
- Retain investment bankers to explore sales of Navios’ tanker, bulker and boxship arms;
- Stop buying new ships and use cash to buy back stock until it trades closer to NAV.
With the company’s annual general meeting on 19 December, Sherwood is urging investors to withhold votes from a director standing for re-election, Serafeim Kriempardis.
He is also asking fellow shareholders to “demand” his reforms be adopted in messages to directors, particularly those who not only are “not pleased” but in fact “mad as hell.”