Real-time Portfolio

Danaos Corp. (DAC)

12/27/2024 

Danaos Corporation, together with its subsidiaries, provides container and drybulk vessels services in Australia, Asia, and Europe. The company offers seaborne transportation services by operating vessels in the containership and drybulk sectors of the shipping industry. As of April 03, 2024, it had a fleet of 68 containerships aggregating 421,293 twenty-foot equivalent units in capacity. The company was formerly known as Danaos Holdings Limited and changed its name to Danaos Corporation in October 2005. Danaos Corporation was founded in 1963 and is based in Piraeus, Greece.

Nutrien Ltd. (NTR)

12/06/2024 

Nutrien Ltd. provides crop inputs and services. The company operates through four segments: Retail, Potash, Nitrogen, and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seeds, and merchandise products. The Potash segment provides granular and standard potash products. The Nitrogen segment offers ammonia, urea, environmentally smart nitrogen, nitrogen solutions, nitrates, and sulfates. The Phosphate segment provides solid fertilizer, liquid fertilizer, and industrial and feed products. In addition, it provides services directly to growers through a network of farm centers in North America, South America, and Australia. The company is headquartered in Saskatoon, Canada. 

 Reasons to buy

1. Solid and essential business: one of the major players in the essential agricultural fertilizer market. Global population will continue to grow hence the food demand. Fertilizer demand is stable and growing, but its price is volatile.
2. Strong FCF: what impressed me the most is that NTR has been FCF (free cash flow) positive going as far back as 2010. The fertilizer prices have been very volatile and none of its competitors was able to match its positive FCF performance, which may indicate some pricing power. I think it is most likely due to its more stable retail business.
3. Moderate debt: net debt increased due to acquiring Agrium in 2018. Currently $11.4 billion net debt with ~5% interest rate, which is ~2.1x NetDebt/EBITDA ratio. Debt interest rates are reasonable and maturities are well spreaded out (see chart below).  
4. Intrisic value: Since 2019, it has low annual FCF of ~1.9 billion and high FCF of 5.6 billion. It is reasonable to assume cycle low FCF forward is ~2.0 billion. Its current market cap is ~23.7 billion, which is less than 12x. I think it is under value.