Apparently I should have waited one day to post my Hornbeck Offshore Services thesis. Yesterday their 2014 10-K was released in addition to an announcement on the sale of four ships to the US Navy. You can read the details of the sale here. The announcement says they sold three ships with an option for the fourth (and a potential fifth), but the 10-K says they sold four so I assume the option was exercised. This sale gives us some great information on what their full fleet may be worth.
Continue reading “Hornbeck Book Value Update”
Author: Travis Wiedower
Hornbeck Offshore Services (HOS)
According to Baron Rothschild, the key to making money is to “buy when there’s blood in the streets.” This quote, and more importantly the concept of contrarian investing, has been immortalized by Warren Buffett and many investors following him. Well right now, there’s a whole lot of blood in the streets of the oil industry and Hornbeck Offshore Services (HOS, $19.58) is the best combination of downside protection and long-term upside I’ve seen.
Business overview
Hornbeck manages offshore vessels (OSVs) that supply drilling rigs. 75% of their revenue is domestic (primarily Gulf of Mexico) with the rest mostly in Mexico and Brazil. The beautiful thing about operating supply vessels in the Gulf of Mexico (GoM) is the Jones Act which creates a significant barrier to entry. Essentially, vessels that transport merchandise and passengers in US waters must be owned and managed by US citizens and the vessels must have been built in the US. Foreign vessels can’t just show up and start taking work away from Hornbeck and the other operators. This has obviously created an oligopoly in the GoM and Hornbeck is either the #1 or #2 vessel operator in the Gulf depending on how you measure.
Continue reading “Hornbeck Offshore Services (HOS)”
Welcome!
Hello there and welcome to my new blog focused on investing. I recently started a small investment firm, Wiedower Capital, and will be using this platform to post my investment ideas and general investing thoughts. My investing style is mostly in turnarounds and small or micro-cap companies in the United States and Canada. Feel free to get in touch with any questions or comments. Cheers!
Travis Wiedower 