My NOL Story

I bought some NOL share last week and sold out today. Following is an edited excerpt of my emails with my friend in Jakarta. No conflict of interest as I do not hold any position in NOL now. I am not always that accurate...Cheers,, Pete

7 August 2008 12:38am
I did sometime in LCL shipping at Votainer which was one of the largest LCL carrier worldwide but was acquired Air Express and now is part of DHL. My dissertation was about LCL business.

I was tempted to think that the market has priced in the share dilution with the forthcoming hapag lloyd acquisition if NOL is successful.

With world trade possibly thinning out and a directionless oil price situation and a possible over capacity on the carrier market, NOL does have an uncertain future. It was partially brought down by the bad showing of its competitor OOCL.

Actually, what I am looking for is a formidable management team to steer clear this cycle and it would be ready to ride the next. One of my bets is that most yards have converted to oil based vessels and with a limited built out of container carriers, the over capacity is likely to be shorter term. If an up turn in trade happens within next 18 months, the capacity over hang could turn into a shortage giving the carriers better pricing power.

APL's largely trans pacific and trans atlantic routes which are highly regulated by tariff filing by FTC in US could make the price adjustment slower than on un-regulated routes. The OOCL bad showing does worry me a bit as it is largely intra asia with good chinese political support and tung chee wah behind it did not help much. Hmmm.....

Actually, I am tired of trading in and out of market and looking for medium term place to park funds.....

My last caveat is that nol is largely a temasek cornered play and market price transparency is more opaque. 

7 August 2008 7:50pm
After writing such a long story on NOL to you. I decided to buy NOL today when it broke record low of 2.51 but I landed most lots at 2.52 which is OK. There is a .04 dividend payment soon so not so bad.

11 August 2008 12:42pm
My trading instincts have the better of me and I sold my NOL shares at 2.68 this morning which I bought at 2.52 last week for a good profit. I am back to looking for investment opportunities again. My sell rationale is AXA which is one of the funds that has majority stake has started accumulating from about 5% to 7% and I think the buying pressure will ease once they have gotten what they wanted. Secondly, the war in Georgia could cause an increase in oil prices which will affect NOL.