For what it’s worth, I sold out of my entire ASB holding first...

For what it’s worth, I sold out of my entire ASB holding first thing this morning. My main highlight (or perhaps I should rather call it a lowlight) from today’s call was Management’s statement that the previously announced 500mA$ revenue target for the Support business was “totally aspirational” and that “whenever we get there, we’ll probably come up with another number” (or something along those lines).

My original investment thesis for ASB hinged around the fact that a) the current Net Cash balance, b) the expected Free Cash Flow from the existing order book, and c) the likely future value of the Support business altogether essentially covered the current Market Cap, with any new shipbuilding orders representing virtually free upside. In particular, the estimated future value of the Support business constituted a significant portion of that “valuation floor”.

Now, if Management come and tell me that they are essentially pulling numbers out of their backside, when it comes to estimating future Support revenue, half of that investment thesis for me goes straight out of the window. That is especially true in light of the fact that said Support revenue, as it has increasingly transpired, is not really sticky and stable but rather subject to multi-party competitive tenders, even on the vessels that have been built by the company itself.

I still see some optionality in ASB, at its current price, but given the sheer lack of visibility (and/or dependability) on its future pipeline I now think that the time value of that option is starting to run out fast, while its intrinsic value is still pretty much at zero. So, I’m happy to watch this from the sidelines, until the fundamental picture improves.

Meanwhile, good luck to all holders.