December 13, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Seaspan (NYSE: SSW ) surged more than 33% in early trading after the shipping services firm announced a plan to repurchase up to 10 million shares at $15 apiece, a 43% premium over yesterday's close.
So what: Management aims to restore confidence following a sharp sell-off in shares of not just Seaspan but a variety of shipping stocks, including DryShips (Nasdaq: DRYS ) , Eagle Bulk Shipping (Nasdaq: EGLE ) , and Paragon Shipping (Nasdaq: PRGN ) . The difference, analysts say, is that most Seaspan clients are locked into long-term contracts. Guaranteed work protects against the oversupply and rate volatility issues that plague the rest of the industry at the moment.
Now what: Yet spending $150 million to repurchase shares at a premium might be overdoing it. After all, if the shares are cheap, wouldn't management create more value for shareholders by purchasing at a discount or increasing the dividend? Let me know what you think using the comments box below.
Interested in more information about Seaspan? Add it to your watchlist by clicking here.