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DAC - Danaos


JRM
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I know there are some shipping experts on this board.  I would be grateful for any wisdom and insights about why Danaos is so cheap (optically).

 

It looks like they restructured some debt for equity recently, and Cerberus currently own 15% of the equity based on a recent filing.

 

What is the reason this shipping company trades at such a discount to peers?  Industry average appears to be closer to 1x book value where as DAC is still less than 0.3 BV.  They also appear cheap on a PE basis (<2). 

 

Is the debt a concern even after they've restructured? 

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Just a guess, but a 10 second google search reveals that the average age of their fleet is over 11 years (by comparison Seaspan's is about 7 years old), and a lot of their ships are on the smaller side.  Their 5 largest ships that are 13,000 TEU (largest TEU available is 24,000).  So just back of the envelope, it doesn't look like the prettiest girl on Tinder.

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  • 3 weeks later...

I think there is still some meat on the bone, but not enough margin of safety with my unfamiliarity with the business and sector.  This was fairly heavily shorted, so I think some of the move may have been short covering.

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