Swing Trade: NAT – Nordic American Tankers

Update 2021.11.18: I have just averaged down on this investment, to take my average to 2.44, and now have 188 shares. This is many more than I anticipated originally holding, but the quote from Warren Buffet cant get out of my head “Be fearful when others are greedy, and greedy when others are fearful

I’ve got some scripts that I run on my raspberry pi (internal network), that query the stock market and a few months back in July NAT popped up as a possible opportunity to swing trade.

The indicators that got me interested, where the drop in stock price to 2.6 USD and an RSI that dipped below 20. I had never heard of the company before, but it got my attention. I figured it’s a tanker company how can they do wrong? 5 months later and they still havent recovered, instead I have found myself in the red. The stock price is sitting at 2.19 USD as of writing this, but I dont feel concerned and here’s why.

Yahoo have reported insider buying, and this is a direct quote from yahoo finance.

This is to advise you that our board member Dough Penick of Dallas, yesterday (Thursday September 30, 2021) bought 50,000 shares at $ 2.565 per share, increasing his holding to 175,000 NAT shares. Dough Penick was elected to the NAT Board July 19 this year. During September all NAT board members have increased their holdings of NAT shares.”

https://uk.finance.yahoo.com/news/nordic-american-tankers-ltd-nat-090500097.html

Now this tells me something very important: All board members have purchased, and the price was around 2.5 usd when published. That tells me they either have a very stupid board, or a very confident board. Now keep in mind the only reason to buy shares, is because you believe the price will increase.

Next, there is a strong desire to improve and expand because NAT have decided now is the time to expand. They are offloading old ships and bringing in new. See the link below, but this is also a quote “we informed the market that we are working to sell a few ships and to buy some ships”, and at the bottom of this note there is an even bigger confidence boost “We agree with those (analysts) who now expect a strong upswing.”.

https://uk.finance.yahoo.com/news/nordic-american-tankers-ltd-nat-121500479.html

Finally in the most recent shareholder news released, there are more confirming reports of future confidence, which is backed with evidence “concluded contracts”.

“There are now improved conditions for our Suezmax vessels. During the last two weeks, we have concluded contracts reflecting this.”

There is also a nice little boost their cashflow from a reimbursement relating to insurance, “NAT is expected to receive $4 million to maximum $6 million in cash before the end of 2021 or early in the first quarter of 2022

https://uk.finance.yahoo.com/news/nordic-american-tankers-ltd-nyse-115100616.html

When we then look at the tankers that NAT holds, they’re all Suezmax ships, which from my understanding are typical oil tankers, for transporting crude and refined oil. Now I appreciate the entire world is going crazy for electric vehicles and hydrogen in order to save the planet but lets put reality into perspective. Very few people can get up tomorrow morning, or even in the next year or two and afford a brand new car, never mind a more expensive one which is EV. Therefore as we hopefully put ourselves into a more economic position globally exiting from the Covid Pandemic, the demand for oil will grow again. The development and adoption of hydrogen and electric solutions will take time, and until then oil will still be highly applicable.

Fleet

I am therefore extremely confident that NAT will return to above 3USD and I will be buying more to average down my 2.6 before this rise occurs. My aim is to take 10-20% from this, so if I remain at 2.6 I will be looking at selling between 2.86 and 3.12 USD and depending on how the stock price rises, I may hold with a sell limit that incrementally gets higher.

Note: Please keep in mind I have no financial training and I really dont have a clue as to what I’m doing. Everything here is just me gambling, if you wish to copy then it is of your own choice and free will. I will not accept responsibility for your actions. Above is simply my personal opinion, your decision to agree or disagree is “your opinion”.

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