EKS, I used to have a link to a source of BDI day rates for dry goods shippers, but can't seem to find it. Have rates been forecasted to climb again?
It seems that with the exception of TOPT, all of the shippers and tankers I've put in a watch list are in a death spiral. I am down about 10% on a very small position in EXM but am reluctant to add until I see some kind of catalyst.
Once day rates start to climb again I think many of these stocks will rise nicely and I will entertain holding a basket of them.
In January the cost of shipping commodities such as iron ore and coal fell to the lowest in more than five months. Other than China and their need for raw materials, what's the catalyst for these stocks to rise? Yes, globalization is being argued by the shippers as a so-called paradigm shift. They point out iron ore imports into China have gone up 185% since 2001 (from 90 million tons to 260 million tons in 2005). They argue that China's move to an industrialized economy will take 30 years, similar to that by Japan, Korea and Taiwan, and they need commodities shipped to them.
Fine and dandy, so why are all the stocks looking like they caught the bird flu?
Meanwhile, rail stocks have been the place to be, not shippers. So where is the recovery in shippers going to come from? steel? grains? coal? Iron ore seems to be the only one with any kind of growth, and that's only 6.3%
EXM has expanded its fleet, expanding capacity by 180%; reduced its fleet age (from 25 to 12.9!) and is now below industry average 16; has a trailing PE of 2.83 (!), its lowest ever; gotten listed on the NYSE to improve liquidity and prestige; has done some good things in managing it fleet; and has competitive costs. In Q4 they announced 122% growth in revenue and 42$ growth in net income. Yet the stock looks radioactive.
What are we missing? Or are we simply early?
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