Value Investor's Edge Live #39: Dry Bulk Cash Machine - Genco Shipping Update

Marketplace Roundtable

John Wobbensmith, CEO of Genco Shipping (GNK), a dry bulk shipping company, joined J Mintzmyer's Value Investor's Edge Live on 25 June 2021 to discuss the strong market outlook and company specific plans for capital allocation and shareholder returns.
GNK is benefiting from surging rates and is expected to report a strong Q2 earnings report followed by an even stronger showing in Q3. Although market conditions can change and dry bulk is notoriously volatile, the supply side is the most bullish we have seen in 20-plus years and the signals from demand are also encouraging, particularly in the midsize and smaller segments, which are reviewed in detail in this update.
Perhaps of most interest to shareholders is Genco's plan to begin massive dividend payouts once target leverage is achieved. GNK's officially stated plan is to begin these large payouts after Q4-2021 results (i.e. in early-2022). However, market conditions have been very strong, so there's a potential for GNK to start to move even faster. With current market rates and GNK's stated dividend policy, we could theoretically see yields of 30% or higher against current share prices.
This interview contains relevant insights for investors in all other dry bulk companies, including 2020 Bulkers (Oslo: 2020), Diana Shipping (DSX), Eagle Bulk (EGLE), Eurodry (EDRY), Golden Ocean (GOGL), Grindrod Shipping (GRIN), Navios Partners (NMM), Pangaea Logistics (PANL), Safe Bulkers (SB), Seanergy Maritime (SHIP), and Star Bulk Carriers (SBLK).
Topics Covered
(2:00) Dry bulk market overview
(8:00) Differences between midsize and Capesize markets?
(12:30) Any clear impact from upcoming environmental regulations?
(15:45) Views on ammonia or LNG-dual fuel designs?
(17:15) Any interest in newbuild assets or resale tonnage?
(19:15) Any other growth potential?
(22:30) Potential to raise the dividend sooner due to strong markets?
(25:15) Dividend structure? Potential to pay even in weak markets?
(27:45) Views on low leverage? Optionality to increase it?
(30:15) Any desire to add time-charter coverage in this market?
(32:00) Review of scrubber program and economics.
(34:30) Why choose Genco Shipping (GNK) as the favored dry bulk play?
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