Naureen Malik of Barron’s doesn’t believe that investors are giving Seaspan the credit that it deserves:

a. investors have sold off shipping stocks amid expectations of a slowdown in global trade.

b. But Seaspan, the largest pure-play shipping company that focuses on transporting consumer products, should sail smoothly through these choppy waters.

c. Company has no exposure to volatile spot prices, thanks to 10-12 year contracts it has locked in for its entire fleet, including ships that it is having built over the next few years. The market, though, isn’t differentiating between Seaspan’s long-term model and others that have short-or-medium term contracts.

d. At $22.82, the shares have sunk 31% over the past 12 months versus a 9% decline in Dow Jones U.S. Marine Transportation Index.

e. A string of earnings gains should cause the stock to bounce back

f. Seaspan’s aggressive growth plan will more than double its fleet from 30 to 68 ships through 2011. While this has disconcerted some, the management team has been conservative.  Financing for these ships has already been secured at attractive interest rates (6.1% for nearly 13 years) and every new vessel being built is backed by a long-term charter with a major ocean liner.

g. Seaspan has $7.1 billion of revenues locked in through its contracts, pointing to solid cash and dividend growth ahead.

h. Seaspan is considered a “synthetic MLP,” or master limited partnership, common in the energy industry; the dividend income is taxed at blended rate of 3%. [About 80% of dividend income is taxed as return on capital while the remaining is taxed at the standard 15% rate.]

i. Seaspan now has seven customers, up from two in 2005, but China makes up 60% of its business.

j. Ocean liners are outsourcing more than 50% of their vessels to companies like Seaspan rather than owning them compared to just 15-20% in the early 90s.

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