I really find all shipping stock in general too dangerous for my investing style - interested to read more, but my key problems with the industry in general are as follows:
- Dominated by two-pocket interests: firms are run for benefit of insiders and not public shareholders, with management fees to private companies, at-the-market dribble offerings that dilute shareholders, opaque practices eg funding commitments / transfer between public & private entities, and of course environmental risk
- It should be valued as a transport stock, but investors sometimes see it as a commodity stock - it ships around commodities, but charter pricing is more determined by what needs to be moved where, and availability of vessels than commodity prices per se. Remember, low prices generate demand for commodities that should bode well for transportation, and high prices limit demand in the long-run.
- Highly-marketed: yields look impressive, but many debt structures were designed for peak markets and not the moderate markets most owners now have to endure. IPOs are highly prime-pumped, and the recent three IPOs are already tailing downwards.
- New ordering of vessels: have you seen the huge bulge of new orders? Remember what happened in the 80s...and the 70s...and the 60s...it's cyclical...!
- Market structure: little natural monopoly, brand, pricing power etc.
On the plus side, some true speculative fortunes have been made by some astute investors and owners over the years, and that I truly respect.
I find the shipping world truly fascinating, even if it is not one that I would readily consider for investment...not at least at values today...
What are your thoughts? |
