IMPP - Globus Maritime: Upgrading To Buy On Massive Insider Buying

2023-10-02 00:19:31 ET

Summary

• Shares of Globus Maritime have more than doubled in value in the past month as the founder and chairman Georgios Feidakis more than tripled his ownership in the company.
• Last week, Firment Shipping, an entity controlled by Mr. Feidakis disclosed a 12.5% stake in the company.
• Like many Greece-based nano-cap shippers, Globus Maritime has raised significant funds through offerings led by controversial investment bank Maxim Group, resulting in substantial dilution for common equity holders.
• With the Maxim Group-led offerings facing increased scrutiny from the SEC, the times of relentless shareholders might soon be over.
• With dilution risk receding and Globus Maritime's founder and chairman now more aligned with common shareholders, I am upgrading shares from "Hold" to "Buy" with a price target of $3.50.

Note: I have covered Globus Maritime Limited ( GLBS ) previously, so investors should view this as an update to my earlier articles on the company.

Over the past month, shares of small, Greece-based dry bulk shipper Globus Maritime Limited or "Globus Maritime" have more than doubled in value on vastly increased trading volume as founder and chairman Georgios Feidakis more than tripled his ownership in the company through a series of open market purchases.

Last week, Firment Shipping, a private company controlled by Mr. Feidakis disclosed a 12.5% ownership stake (emphasis added by author):

This Schedule 13D is being filed on behalf of the following:

Firment Shipping Inc., a Marshall Islands corporation (“Firment Shipping”); and Georgios Feidakis (“Mr. Feidakis,” and together with Firment Shipping, the “Reporting Persons”).

The Reporting Persons may be deemed the beneficial owners of approximately 12.5% of the Issuer's outstanding Common Shares. (...)

Firment Shipping currently owns an aggregate of 2,582,611 Common Shares, all of which were purchased using the personal funds of Mr. Feidakis. Over the past 60 days, Firment Shipping purchased an aggregate of 1,794,681 Common Shares for a total purchase price of $2,696,611.26 .

Remember, Globus Maritime has been one of many Greece- or Cyprus-based nano-cap shipping companies that has pursued growth to the detriment of common shareholders with the help of controversial investment bank Maxim Group or "Maxim" in recent years.

In aggregate, the company raised $108.3 million in gross proceeds from four Maxim-led offerings between December 2020 and June 2021.

As a result, common equity holders have been diluted literally beyond recognition. The five-year chart pretty much speaks for itself:

Management has been using the funds to renew and expand the company's fleet with an aggregate of five fuel-efficient Ultramax newbuildings currently under construction at shipyards in China and Japan.

After disposing of three older vessels in recent months, the company currently owns six dry bulk carriers with an average age of 11.2 years.

Please note that Globus Maritime will recognize a gain of approximately $3.8 million in conjunction with the recently announced sales of the dry bulk carriers Star Globe and Sky Globe in the upcoming Q3 report.

Even after the recent rally, shares are still changing hands at an approximately 80% discount to estimated net asset value ("NAV"):

With the Maxim-led offerings facing increased scrutiny from the SEC, the times of relentless shareholder dilution by Greece-based nano-cap shippers might be over sooner rather than later.

Investors should note that in recent months, large Greece shipowners have accumulated significant stakes in a number of recent Maxim clients:

• In early July, an entity affiliated with Costamare Inc.'s ( CMRE ) Chairman and CEO Konstantinos V. Konstantakopoulos disclosed a new 5.1% stake in Capesize pure play Seanergy Maritime Holdings ( SHIP ).
• In late August, an entity affiliated with George Economou disclosed a new 9.5% stake in tanker company Performance Shipping ( PSHG ) and subsequently engaged in a proxy fight.
• Last week, an entity affiliated with George Economou disclosed a new 9.1% stake in dry bulk shipper OceanPal ( OP ).

At this point, only Harry Vafias-led Imperial Petroleum ( IMPP ) and Petros Panagiotidis-led Castor Maritime ( CTRM ) continue to relentlessly dilute common shareholders with the help of Maxim.

Bottom Line

With Maxim-led offerings under increased scrutiny from the SEC, the times of relentless dilution for common equity holders in small Greek shipping companies might soon be over.

With dilution risk receding and Globus Maritime's founder and chairman now being more aligned with common shareholders, I am upgrading shares from " Hold " to " Buy " with a price target of $3.50 which still represents a 60% discount to NAV to account for the company's tainted history and the decision to invest in newbuildings rather than aggressively repurchasing common shares at a fraction of net asset value.

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