BROADCASTS.com

Danaos Corp. (NYSE:DAC) CFO,\xa0Evangelos\xa0Chatzis, joined\xa0Value Investor's Edge Live\xa0on 16 June 2022 to discuss the current\xa0containership\xa0leasing markets and capital allocation priorities going forward. DAC has been a massive winner from the ongoing supply chain crisis, but they have taken the long-term view with very responsible moves including comprehensive refinancing, massive deleveraging, and fixing their fleet onto medium- and long-term contracts to lock in sky-high rates. DAC has benefitted from a significant investment in Zim Integrated Shipping (ZIM), which they have partially monetized over the past six months.
Despite executing in near-perfect form, DAC stock has been stagnant the past few months and has now fallen back to negative territory y/y. This position is one of our top ideas at\xa0Value Investor's Edge, and we were very encouraged by the recent authorization of a\xa0$100M share repurchase program. DAC short interest has increased this summer and now looks to be a coiled spring ahead of what is expected to be multiple\xa0years\xa0of consecutive earnings blowouts amidst surging free cash flows. Our current fair value estimate is $125/sh, which implies around 80% upside to recent trading ranges.\xa0
This interview and discussion of the underlying\xa0containership\xa0markets is relevant for anyone with container shipping interests or investments, including firms such as Atlas Corp. (ATCO), Costamare (CMRE), Euroseas (ESEA), Global Ship Lease (GSL), Matson (MATX), Navios Partners (NMM), Textainer Group (TGH), Triton Intl (TRTN), and Zim Integrated Shipping (ZIM).
Topics Covered


(0:00)\xa0Intro/Disclosures


(1:45)\xa0Update on overall\xa0containership\xa0leasing markets.


(6:00)\xa0What is the market missing when selling off all these stocks?


(8:15)\xa0Any restrictions with the share repurchase program? Available now?


(10:15)\xa0Why $100M for the repurchase program (vs. more or less)?


(11:30)\xa0Why not just take the company private?


(14:15)\xa0Review of stock price vs. enterprise valuation.


(17:45)\xa0Newbuild\xa0strategy and overall approach?


(21:45)\xa0Target charter durations?


(24:15)\xa0Planned leverage for\xa0newbuild\xa0assets?


(27:30)\xa0When might more\xa0newbuilds\xa0be added?


(33:30)\xa0Likely economic return from\xa0newbuild\xa0transactions (ROE, etc)?


(36:15)\xa0Any potential for secondhand vessel purchases?


(37:30)\xa0Potential for more vessel sales? Forward sales?


(42:30)\xa0Dividend policy: potential for a special\xa0div\xa0or near-term raise?


(44:45)\xa0Any changes to ZIM divestment policy?


(46:00)\xa0Charter nuances with HMM extensions, CMA CGM options, etc.


(49:00)\xa0Repurchase lock-up? Q2 reporting timeline?