Price performance year-to-date
The Guggenheim Shipping ETF (SEA), the index that tracks the global shipping index, has returned 3.6% year-to-date. Only two companies in the dry bulk shipping space have gained amid falling spot and time charter rates since the start of this year.
Diana Shipping Inc. (DSX) has matched SEA’s year-to-date returns, and Navios Maritime Partners L.P. (NMM) has gained 0.7%. However, DryShips Inc. (DRYS), Navios Maritime Holdings (NM), and Safe Bulkers (SB) have lost 39.8%, 14.2%, and 20.8%, respectively, in the same time period.
Navios Maritime Partners L.P. (NMM) was formed in 2007 by Navios Maritime Holdings (NM). NMM is engaged in seaborne transportation services for a range of dry bulk commodities, including iron ore, coal, grain, and fertilizer. Navios Holdings owns a 20% interest in Navios Maritime Partners, which includes a 2% general partner interest.
Navios Maritime Partners has a 2.7% holding in SEA. The SPDR S&P 500 ETF Trust (SPY) covers the broader industry index.
The Navios fleet
Navios Maritime Partners (NMM) operates 31 vessels with an average age of 7.8 years. NMM’s current fleet includes eight Capesize, 12 Panamax, and three Ultra-Handymax vessels. It also has eight container vessels. The company has started shifting its focus to containerships, as the dry bulk sector continues to be weak.
Since its inception, Navios has increased its distribution by 26.4%. It has also increased its fleet capacity, measured by deadweight tonnage (or DWT), by 420%.
In this series, we’ll be looking at Navios Maritime Partners (NMM) and whether it will be able to provide above-average returns amid weak dry bulk market fundamentals. Some of NMM’s charter contracts are rolling off in the next 12 months. Most of these contracts have higher rates than current 12-month time charter rates.
We’ll see if the downside is already priced into the stock price or if there’s still more downside left. We’ll see if the company’s foray into the container sector will be able to offset this decline.