In the past, we have highlighted examples of classic Taylor Frigon growth companies: well-run businesses positioned in front of fertile fields for future growth.
Today, we're posting a November 8 interview with the CEO of a company we own in our Income Strategy, which seeks income-producing securities, some of which may be debt-based (such as bonds) but some of which are ownership-based (preferred stock and common stock in dividend-paying companies).
As we've recently explained, it is very important for income-seeking investors to have a clear understanding of the issuer of their income securities, whether they are buying the company's bonds or the company's stock. They should seek to determine whether the company is well-managed, and whether it is taking steps to grow and ensure its survival against competitive threats.
Nordic American Tanker Shipping, featured in the above interview, has a somewhat atypical operating model compared to many companies investors may be familiar with, in that they pay out substantially all of their net operating cash flow in the form of dividends to their shareholders.*
The company runs a strong balance sheet with little to no debt, and can therefore take advantage of periods in which the prices on tanker ships soften by adding to their fleet more easily than many of their competitors. The company's operating cash flows, of course, are dependent upon the shipping rates they can charge for moving bulk oil across the ocean, rates which fluctuate based on a variety of global economic and political factors.
In the interview above, CEO (and founder of the company) Herbjørn Hansson explains some of the important aspects of his company's business model in exemplary fashion. The interview is also noteworthy for a quotation that all investors should write down and hold onto.
At two minutes and fifty seconds into the video clip, Mr. Hansson says: "As I've said in other contexts, America is a stronger nation than Americans think."
We absolutely agree with Mr. Hansson's statement. We have made the same point ourselves, for example in this recent post, which shows that the US economy has grown almost 30% over a period that many are calling a "lost decade," or this post in which we provided counter-arguments against the constant drumbeat of negative economic predictions and those calling for a new plunge as steep as the one that took place in 2008-2009.
In many respects, the negativity we wrote about in those earlier posts is still going on today, although business earnings in the most recent quarter largely exceeded most analysts' expectations. The bigger picture is that this failure to realize the strength of the American economy leads to all kinds of errors, including the fear of other countries (such as China) and the bashing of their attempts to grow.
Instead of bashing China and other emerging economies, the US should simply remove the self-imposed obstacles to our own economic growth (including excessive corporate tax rates, penalties on the repatriation of capital earned overseas, inflationary monetary policy that drives up commodity prices and weakens the US dollar, and regulations which make it more expensive to hire new employees).
We recommend paying attention to the video above, both to understand some aspects of the environment in which Nordic American Tanker operates, and to hear CEO Herbjørn Hansson argue that America is a stronger nation than Americans think. Underestimating the resilience of the American free-enterprise system is a major error, and one that many commentators of all political persuasions often commit. We hope that it is an error that readers of this blog will avoid.
* At the time of publication, the principals of Taylor Frigon Capital Management owned securities issued by Nordic American Tanker (NAT).
Subscribe to receive new posts from the Taylor Frigon Advisor via email -- click here.
Today, we're posting a November 8 interview with the CEO of a company we own in our Income Strategy, which seeks income-producing securities, some of which may be debt-based (such as bonds) but some of which are ownership-based (preferred stock and common stock in dividend-paying companies).
As we've recently explained, it is very important for income-seeking investors to have a clear understanding of the issuer of their income securities, whether they are buying the company's bonds or the company's stock. They should seek to determine whether the company is well-managed, and whether it is taking steps to grow and ensure its survival against competitive threats.
Nordic American Tanker Shipping, featured in the above interview, has a somewhat atypical operating model compared to many companies investors may be familiar with, in that they pay out substantially all of their net operating cash flow in the form of dividends to their shareholders.*
The company runs a strong balance sheet with little to no debt, and can therefore take advantage of periods in which the prices on tanker ships soften by adding to their fleet more easily than many of their competitors. The company's operating cash flows, of course, are dependent upon the shipping rates they can charge for moving bulk oil across the ocean, rates which fluctuate based on a variety of global economic and political factors.
In the interview above, CEO (and founder of the company) Herbjørn Hansson explains some of the important aspects of his company's business model in exemplary fashion. The interview is also noteworthy for a quotation that all investors should write down and hold onto.
At two minutes and fifty seconds into the video clip, Mr. Hansson says: "As I've said in other contexts, America is a stronger nation than Americans think."
We absolutely agree with Mr. Hansson's statement. We have made the same point ourselves, for example in this recent post, which shows that the US economy has grown almost 30% over a period that many are calling a "lost decade," or this post in which we provided counter-arguments against the constant drumbeat of negative economic predictions and those calling for a new plunge as steep as the one that took place in 2008-2009.
In many respects, the negativity we wrote about in those earlier posts is still going on today, although business earnings in the most recent quarter largely exceeded most analysts' expectations. The bigger picture is that this failure to realize the strength of the American economy leads to all kinds of errors, including the fear of other countries (such as China) and the bashing of their attempts to grow.
Instead of bashing China and other emerging economies, the US should simply remove the self-imposed obstacles to our own economic growth (including excessive corporate tax rates, penalties on the repatriation of capital earned overseas, inflationary monetary policy that drives up commodity prices and weakens the US dollar, and regulations which make it more expensive to hire new employees).
We recommend paying attention to the video above, both to understand some aspects of the environment in which Nordic American Tanker operates, and to hear CEO Herbjørn Hansson argue that America is a stronger nation than Americans think. Underestimating the resilience of the American free-enterprise system is a major error, and one that many commentators of all political persuasions often commit. We hope that it is an error that readers of this blog will avoid.
* At the time of publication, the principals of Taylor Frigon Capital Management owned securities issued by Nordic American Tanker (NAT).
Subscribe to receive new posts from the Taylor Frigon Advisor via email -- click here.
