Saturday, December 8, 2012

GLBS Quarterly Update

Globus Maritime (GLBS) is a microcap shipping company headquartered in Greece. The company trades on NASDAQ. The company reported a loss of $0.8M for the 3rd quarter ended Sept 30.

I bought GLBS four months ago as an experiement in self-reliant small cap investing. I looked for cheaply valued small cap stocks. For the most part small caps - which I define as less than 1 billion in market cap - have no analyst coverage and very little news coverage. I used some screeners, mostly from Morningstar to get a list of candidates. Then I whittled my list down to 2 stocks: McRae Industries and GLBS. I don't regret my decision on those two given what I knew at the time. Ostensibly, McRae is doing decent while GLBS is down a hefty 33%.

Clearly, GLBS is down 33% because of two consecutive losing quarters. The two quarters' losses were small however, only a total of $3.2M of which about half was due to a previous year's receivable write-down. Compare that with 140M of equity. A long term investor should expect this kind of results in the highly volatile shipping business. The Baltic Dry Index is now hovering at 1000, which is a big drop from a high of more than 10,000 just before the financial crises of 2008.

Today, the world has gone a long way towards recovery from 2008, but the shipping sector is suffering from a from a glut of ships. Therefore GLBS management is hardly to blame for the weak results. As a part time investor working in an unfamiliar sector, I am the first to admit I don't know exactly why there is a glut of ships. But I believe it is at least in part due to unbridled spending just before the financial crises.

The glut effect caused the average daily rate per ship to be $10K for GLBS. Breakeven is around $12K. The GLBS presentation mentioned that the overbuild peaked in 2008 and is supposed to bring supply back to normal in the coming years. I really hate to rely on company supplied industry/market analysis but I make an exception now.

GLBS appears to be one of those companies that is honest and patient. Waiting for a weak moment to build up assets on the cheap. GLBS is extremely undervalued at a very depressed time for its industry. The critical question is whether GLBS is too good to pass up, or is the industry so hopeless that no company in the industry is worth it. Each GLBS share has about $13 of equity but the last close was $1.86 and its recent low was $1.63! At the current price I will hold off on buying more shares until the next quarterly. But if it falls down to around $15 I will seriously considering increasing my current position by 50%.

You can go here to see all my sources for this article. Any thoughts? Please comment!


  1. It looks like you bought at the bottom. Did you cash in on the 50% gain? I'm considering jumping in at $2 but need a bit more information. There are a lot of dead weight shipping stocks out there.

  2. Hi Ardiana, I was watching GLBS but sadly I didn't pull the trigger. It hit a low of $1.41 and hasn't visited that price for a while now. I am going to consider buying GLBS again when it gets to the $1.75 territory. That's the tough thing, having the courage to follow through on your decisions.

    But if I did buy GLBS at $1.50, I definitely would not sell at $2. This stock plays a part in my overall portfolio strategy and it is the high risk high return portion of my portfolio. I would consider selling this at $6 or after 5 years, whichever comes first.

    I think the key to investing in GLBS is to wait for the glut of ships to clear out in a year or two, only then will shipping stock prices move.

    I still have my position that I entered with back in Sept'12, at $2.90.

    bovine bear

    1. I just got my 300 pieces at $2,06. It was the last trade of the day :)

      Exactly, I have similar investment strategy than yours. I was looking back on that course graph and though if I was watching this from the beginning at $6, I might have went in at $3 like you did, expecting a hefty 100% return. Then I would have taken a hit and probably missed the repurchase part at $1,50 as I like to wait until -60% or so until I execute. It would have been very annoying and my sympathies to you as it must have been very annoying for you to hold onto these past months.


  3. thanks for sympathies but no need, the story needs to play itself out; either it goes to zero or $6 and beyond, when it goes to zero then I'll grade myself and possibly cry :)

    lets keep in touch!

  4. GLBS is up 14 percent today at $2,34 with only 0,1 percent of shares traded! Are you ready to embrace the TRUE POWER of Globus Maritime?

  5. Insane updrift today!! I don't see any news but it's now at $2,76 and going up with only 70k shares traded! I've got my sale @ $3,50, lets see where it goes...!


  6. Good for us! I understand that you want to get out at $3.50 to make a 75% return on your investment. However, if I were you, I'd look at the fundamentals, I don't see any reason for it to keep going to $6.

    NOTE: I am not giving you financial advice as I am not legally qualified :)

  7. It's no use. I sold @ $2,89. Looks like it's not gonna go any higher. They're probably waiting for a good/profitable Q4, but I can't see when it comes though...


  8. haha ok suite yourself, you may want to re-enter when it takes again? maybe?

  9. GLBS records a $8,00 loss for 4th quarter. For a while there I thought there was a decimal error, but there really is a 4 times market value loss for one quarter! Apparently, 6 vessels lost $9 million each of their market value and Tiara Globe became an "antique" vessel, losing $24 mill.

    I don't yet know what I'm going to do with this. The stock didn't react so it may still be tradable, but this eats out a lot of the potential gains...

  10. Well, the stock still trades way below book. Also, I think this fact was priced into the stock already, so veterans shouldn't be surprised.

    Also I recommend reading up on their competitors, SBLK just took a $300 mil writedown! That is half their assets.

    My investing style is to go for sure things, and GLBS is risky but high potential gain. It just isn't my style anymore.

    good luck