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Why Shares of Navios Maritime Partners L.P. Jumped 11% Today

By Travis Hoium - Mar 23, 2015 at 3:45PM

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An analyst had shares of this shipping company riding high today.

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 drybulk and container vessel owner Navios Maritime Partners L.P. (NYSE: NMM) jumped 11% late in trading today after being up graded by an analyst.

So what: Analysts at Deutsche Bank upgraded the stock from a hold rating to a buy rating, but kept their $15 price target unchanged. They pointed to a distribution yield of 18% and the company's average charter duration of 3.4 years as strengths that should keep cash flow coming to investors.  

Now what: The company is transitioning from drybulk to container vessels, which currently have an 8 year charter duration for Navios. That's a strategic strength and one reason Deutsche Bank said Navios was like "the baby (Navios shares) being thrown out with the bathwater (dry bulk)".  

Given the fact that management committed to a $1.77 per share distribution through the end of 2016 it could be true that the upside is tremendous for investors. I just don't see a high distribution as the best reason to buy a stock and think the payout could be cut dramatically by 2017 or before. So, I'll stay cautious on Navios Maritime Partners for the moment because this looks more like a value trap than a fundamental value to me.

Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of Deutsche Bank AG (USA). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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