Optimal Capital Allocation

At P/NAV > 1x, ordering newbuilds is NAV-accretive (you add $1 of assets while the market values existing assets at >$1). At P/NAV < 1x, buying back shares is accretive (you buy $1 of NAV for <$1 via the market). The break-even is always 1.0x.

Investor use: Check whether shipowner management is allocating capital in shareholders' interest. A company ordering newbuilds at P/NAV 0.7x is destroying value — they should be buying back shares. Conversely, aggressive buybacks at P/NAV 1.5x may signal management overconfidence.