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Hedge funds hook shipping stocks grappling for recovery

Reuters  |  LONDON 

By Keidan and Saul

LONDON (Reuters) - Shipping stocks may still be in the doldrums in the view of many investors, but have bet at least $675 million on signs of renewed buoyancy in the industry.

made initial forays into shipping stocks in the third quarter of 2017, but significantly stepped up their bets in the final three months of the year, filings compiled by Symmetric show.

"Shipping has been in a terrible trough for a number of years," Chris Walvoord, of hedge fund research at Aon Hewitt, said.

"are starting to see opportunity ... and are calling the bottom on these companies and there are at least a couple out there getting into this space."

The move by comes as signs of a fragile recovery in segments of the global industry are appearing, after a near-decade long slump caused in part by a glut of ships ordered.

"You're looking, over the next two years, for these stocks (in shipping) to rise 50 to 100 percent," said William Homan-Russell, of shipping at $1.5 billion hedge fund and shipping investor

"When adjusting for our estimated shipyard costs, share prices are at the lowest prices they've been since 1999."

HIGH AND DRY

Dry bulk shipping - one of the hardest hit parts of the industry - is expected to see better prospects as fleet growth slows and an expected pick up in demand for commodities such as coal, iron ore and grains bolster employment for bulker vessels.

By contrast, tankers are likely to see tougher times for now with weak freight rates hitting bottom lines of operators.

Hedge fund ownership of Nordic American Tanker, which ships oil, for example, rose to 27 percent at year-end, from 2.4 percent at end-September, according to the data from Symmetric, which tracks investment funds. Data for earlier periods was not immediately available.

And ownership by of Dryships Inc, which is active in dry bulk, tanker and offshore shipping markets, meanwhile, rose to 80 percent, from 10.3 percent.

had invested $308 million in Kirby Corp, $26 million in and $9 million in Dryships.

Dry bulk firm and transporter were also popular as well as Ship Finance International, which has a diversified fleet, the data showed.

Funds had also invested $35 million to their holdings of and $77 million in

Greywolf Capital Management, which initially invested in Tanker Investment before it merged with Teekay Tankers, is now among the holding a combined $39 million in Teekay stock, and is bullish for the sector's prospects.

"We're starting to see fundamental improvement in many shipping markets with rates moving up, not because of temporary events, but rather as a result of a true balancing of supply and demand," a for Greywolf said.

"With global growth accelerating, this an industry we continue to focus on and that should deliver highly attractive returns in the coming years."

A for Blue Mountain declined to comment.

Some have started moving into (LNG) tanker stocks, investing $4 million in Dynagas LNG Partners, and $62 million in after pulling back from the sector in the preceding three months.

Although other investors pulled back from LNG stocks, a pick up in transport demand has helped the outlook for vessel owners in the LNG sector.

(editing by Alexander Smith)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, February 15 2018. 22:50 IST
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