Is Ship Finance International Limited (SFL) Destined for Greatness?

Today, Ship Finance has diversified into container ships, offshore drilling rigs (including deepwater rigs), and even dry bulk. Frontline still charters many of Ship Finance’s owned ships, including all of its Very Large Crude Carriers, but the company also has a number of rigs chartered to Deep Sea Supply and Seadrill Ltd (NYSE:SDRL) , which are both controlled to some extent by John Fredriksen. Ship Finance is thus one of several arms of Fredriksen’s shipping empire, and it is tightly bound to his success in the industry. That’s a great thing if you believe in Fredriksen’s capabilities as a shipping magnate, but it also poses a real risk should any of his other properties take a turn for the worse.

Ship Finance may be reducing its debt-to-equity ratio, but it still remains high relative to some other peers. While Frontline’s debt-to-equity level is abnormally high for an industry that often maintains high debt levels, Ship Finance still boasts a higher level of debt to equity than SeaDrill, and its debt-to-equity is twice as high as DryShips Inc. (NASDAQ:DRYS)‘ , and over five times as high as Diana Shipping Inc. (NYSE:DSX) . The higher demand for crude oil shipping, and the cost of building out a more diversified fleet, can justify Ship Finance’s higher debt levels. However, investors should be wary of a debt spike similar to what Fredriksen has undertaken at Frontline. Just last week, Ship Finance priced another $250 million in debt while also offering some new shares on the market. The new debt goes toward retiring old debt (which is helpful when the old notes bear higher interest rates), but keep your eye out for any efforts to jack up debt levels in the near future.

Keep track of Ship Finance by adding it to your free stock Watchlist.

The article Is Ship Finance International Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights.The Motley Fool recommends and owns shares of Seadrill.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!