Generating Alpha From 3 High-Dividend Crude Oil Carriers

Management Summary In this article I will show that Crude Oil Carriers (CRU) is undervalued and that Nordic American Tankers (NAT) and Teekay Tankers (TNK) are grossly overvalued. They make for a near perfect pair trade as they pursue very similar strategies, in the same business and have similar financing structure. Company Description Very briefly put the companies own crude carriers that transport crude globally. NAT has the largest fleet focused on Suezmax ships, TNK is a close second with a focus on Suezmax and Aframax ships and CRU is about 33% smaller and focuses on Suezmax and the larger VLCC ships. NAT is net debt free and while CRU has little debt and TNK has some debt. Strategy and Management All three companies pursue a high dividend policy where they pay out net earnings + plus depreciation and some non-cash charges. My general perception is that they are well... Read more