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Jim (cont'd):  

While it is true that this secondary caught me by surprise, as NAT’s CEO Herbjorn Hansson said that his company did not have to do an equity offering when he came on the show back on March 23rd, I think that his accusation that he created no value is completely unfair… I call it faux outrage… I believe that NAT has created plenty of value… and ultimately this offering should also create value… even if it is an unpleasant short term hit for anyone who owns the stock.

How much value… that is a factual question… and we have got the numbers… from its exception Nordic American Tanker has raised $1.07b in offerings… put that number down… that has allowed it to pay for a fleet of 16 ships… and in that time the company has also paid out $716m in dividends to its shareholders… at the moment it has about $180m in cash… so unless you think that the fleet is less than worth less than $100m, when in fact it is probably worth a whole lot more… you had better believe that NAT has created plenty of value… I too was not pleased when I saw the new equity offering, I burst out on the show, and said oh darn it… I do not like what it did to the stock… but I have to admit that this company has been very consistent for and returning value to its shareholders.

Go over the numbers… over the last 11 years Nordic American Tanker has paid out an average of 15.1% yield every year… in cash… whenever the company does an equity offering, it uses the money to buy new ships… which in turn, allows it to increase its already huge dividend… which it can maintain thanks to its low break even cost… and the fact that NAT likes to return all access cash to its shareholders… which is what we want so much from a company… and while the offering does dilute the value of the companies share, in the short term, I have no doubt that eventually NAT will use the money to buy new ships… cheaply… which is what the offering was for… not to pay for the ship that the company bought back in January… those ships should allow it to pay a higher dividend… so if the tanker market does not tank, those ships should make shareholders tons of money to give you a better dividend… and if the market does tank, NAT which seems to be in the best financial shape of any publicly traded company, will buy even more ships inexpensively from the owners who are up against the wall, and have little choice but to sell.

As long as Nordic American is growing its fleet faster than it is growing its share count, it makes sense for NAT to do an offering… and since the company returns so much cash to shareholders, the only way that it can buy new ships is by selling new stock, or taking on debt… and we want new stock sold, we do not want debt… all of the other tanker companies have so much debt that I cannot recommend them on the show… I think that Nordic American Tanker is a terrific company… and I think that Herbjorn Hansson is a fabulous CEO… I understand why he did the equity offering… and the company is definitely in better shape for it, even as it hurt… I, however, would not be a buyer of this stock above $36, where he did the deal… because at that point it has a sort of secondary offering Damocles hanging over it.

Here is the bottom line…

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The Bottom Line!:     There is no reason not to buy  Nordic American Tanker (NAT) at $32.95, which is already up .95 cents from where the offering was priced… and now you can keep collecting its massive dividends… as NAT yields something like 10% at the levels where the stock went out tonight... I believe that NAT’s secondary offering will ultimately prove profitable