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.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

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!