This was extremely difficult to purchase due to illiquidity. I was finally able to purchase shares at $13.75 after starting near $12.50!
Int’l Shipholding filed for bankruptcy a few days ago with $305m in assets and $78m in equity. The assets are mostly Jones Act ships. The thesis here is simple: there is an equity cushion and preferred shareholders are higher up the structure than common shareholders.
Preferred stock has a par value of $56.6m ($100 per share) and trades at $7.8m for a very steep discount. If there is a full-recovery then this would be a 7-bagger. Why could this be a full-recovery? Management had an appraisal on its fleet as of May 2016 which pegged the assets $30m higher than book value. This means assets would have to be $100m lower than fair value for a breakeven recovery. This is a hefty safety margin.
Update: I sold this on October 31, 2016 at $10.80/share (~22% loss). The company posted bankruptcy filings to primeclerk that mentioned a sale of the assets to Seacor whereby no distributions would be made to equity holders (including preferred shares). Note to self: it pays to closely monitor filings in distressed securities!