Posted by Davy on December 19th, 2007 in Enlightened-American Portfolio, Stock Research
Email Davy

This shipping stock is one I’ve followed for a while and was at its 52-week low just a few days ago. In the last 2 days, the stock has jumped over 20%. I don’t know if someone is accumulating the shares or if the company is bidding up its shares to support the stock (they have an open $50M share buyback program).

I’m actually in the middle of writing my report for this company. The cash-flow potential for Horizon is pretty crazy and they seem to have been knocked down due to earnings guidance, fuel costs and general worry regarding recession. The Jones Act provisions under which Horizon operates insulates it from cutthroat foreign competition so the company’s results are a little less cyclical than regular container shippers’. Basically, if the company can generate enough cash to service its massive debt load through the next slowdown, this company is probably 40-50% undervalued.

As it stands, the run-up in the share price may preclude me from taking a full position but I’ll finish my report and post it next month on the website.

Full Disclosure: I have open Jan 08 $17.50 puts on HRZ, which is not disclosed on the Enlightened-American portfolio page (since they were opened this month after the last page update).