Several analysts now argue that these stocks have not recovered as much as they should have, contending that investors who buy in now could pocket upside as the stocks catch up ( even more so after the recent days' sell-off). "When the liner industry is very healthy and counterparty risk goes toward zero and interest rates are down, the value of the lease goes up." "This is equipment leasing," he explained.
But these are not actually shipping companies. Yes, there is a ship and someone is steering the ship. "There's a lot of misunderstanding of what these stocks are," said J Mintzmyer, analyst at Seeking Alpha's Value Investors Edge (disclosure: Mintzmyer owns long positions in several container-ship leasing stocks).
Seeking Alpha's J Mintzmyer (Photo: John Galayda/Marine Money) (NYSE: DAC), Capital Product Partners (NYSE: CPLP), Navios Containers (NASDAQ: NMCI), Navios Partners (NYSE: NMM) and Euroseas (NASDAQ: ESEA). The U.S-listed container-ship lessors (otherwise known as tonnage providers) include Seaspan owner Atlas Corp (NYSE: ATCO), Costamare (NYSE: CMRE), Global Ship Lease (NYSE: GSL), Danaos Corp. Quite a few tanker stock buyers have had a very exciting albeit very unprofitable year in 2020. Tanker and bulker stocks are generally more casino-esque than the container stocks - and shipping investors have been more drawn to the excitement of the casinos.
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And the drivers for tankers and dry bulk are more about geopolitical events and weather and shocks to supply and demand."
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"But usually, the driver for containers is much more about global GDP. Because of COVID and the massive supply and demand shocks to containers, it has been quite a ride," said Giveans. Container shipping is more like a conveyor belt moving goods from Asia to the U.S. Plus, there are a lot more vessels on long-term charters in the container market than in tankers and dry bulk. With container shipping, utilization may move around a couple of percentage points, and in normal times - and obviously this year is not normal - rates stay in a pretty tight band. Jefferies' Randy Giveans (Photo: John Galayda/Marine Money)Īccording to Randy Giveans, analyst at Jefferies, "When you look at tankers, there's a lot more volatility in rates. The liner companies are the direct beneficiaries of these soaring spot rates. West Coast ( SONAR: FBXD.CNAW) were up to $3,835 per FEU as of Monday. According to the Freightos Baltic Daily Index, spot rates from Asia to the U.S. The link is not so clear in container shipping. Theoretically, there should be a clear, direct link between spot rates and stock prices. In tanker and dry bulk shipping, the ship owner is generally U.S.-listed and extremely leveraged to highly volatile daily spot freight rates. They also point to opportunities for investors and traders to ride today's container wave. Their responses highlight significant differences between investing in container shipping versus bulk commodity shipping. recovery?įreightWaves interviewed four shipping analysts to delve into these questions. How can investors expose themselves to this historic trans-Pacific rate spike? Can box stocks woo tanker and bulker shareowners? And what do the curiously low prices of some container equities say about sentiment toward a U.S. Container shipping, declares a glowing new report by Fearnleys Securities, is "The Unsung Hero." Containers have wrestled the ocean-shipping headlines away from tankers and bulkers as stratospheric China-to-California box rates approach $4,000 per forty-foot equivalent unit (FEU).
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