Let me see if I understand this stuff correctly. I've been looking at FRO (Frontier ltd) for a week or so now and it looks too good to be true. It's an oil tanker company with a fleet of double hulled tankers and some multipurpose freighters.

   The PE is 2.3, and the Dividend yeild is 30%! Earnings were a bit short last quarter, but not that much off. Oil inventories are beginning to drop some, so it looks like they will have a fair share of business. The Short interest is fully 10% of float, and with the market recovering it seems there will be a fair bit of covering. As I understand it, if someone shorts a stock they have to pay the dividend when the time comes. With that high of a yeild, there is a big incentive to cover quickly, and with a 10% float the potential is definately there for a squeeze play and a big run up in the price.

   Am I a newbie (I'm not a seasoned pro, I know) or is this stock too good to pass up at this price (currently around $21)?


~~Weird Uncle Jesse~~

PS You can call me WUJ for short

On the 28th, FRO announced a dividend of only 25 cents payable on 6/23.  Essentially, they cut their dividend.  The street knew it was going to happen, I'm sure.  A 1.00 annual dividend only constitutes about a 4% yield at this point.

   Right YoungCash. I finally found that out after digging a bit deeper. It took me awhile though, reading through analists reports. Is there a place I can find this info easier? BTW - 4% still ain't bad.

   However, I still think it's not overvalued. I point to the suprise earnings for Q1. It's almost as large as the projected earnings for the entire year! Also the "Best of Breed" Nordic diluted it's shares to pay for additional ships. Frontline also is increasing it's fleet but is paying for it by cutting dividends. IMO, this is a better long term strategy for the stock price.

  Thanks for the replies guys!

~~Weird Uncle Jesse~~

OSG has 4billion in assets 2.1 billion liabilities and 1.8 billion equity and the Market cap of the company is only 1billion. Undervalued. OSG has a higher net profit margin, return on assets and less debt than FRO.
At the very least OSG should have a market cap of 2billion.

FRO has 3.9billion in assets 3.2 billion liabilities and 730 million equity and the Market cap of the company is 2 billion. Over valued compared with OSG.

So would you like to buy the company OSG at half the price of FRO?

   Thank you JJL for the rundown. I definately see your point.OSG also has very nice volatility which suits me just fine.

   I just might pick me up some after the pullback - I'm kinda skittish about picking up stocks about now. Though I think the rally's got a bit more run in it, it could cave anytime now.

Then again, I could be wrong.

~~Weird Uncle Jesse~~