Hedge funds hook shipping stocks grappling for recovery (updated)

Dynagas LNG Partners LP

15/02/2018 16:48

* Emerging recovery for segments of global shipping industry 
    * Hedge funds making bets on multiple shipping stocks 
    * Nordic American Tanker and Dryships Inc among popular 
stocks 
 
 (Updates with Greywolf background, quote) 
    By Maiya Keidan and Jonathan Saul 
    LONDON, Feb 15 (Reuters) - Shipping stocks may still be in 
the doldrums in the view of many investors, but hedge funds have 
bet at least $675 million on signs of renewed buoyancy in the 
industry. 
    Hedge funds 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, U.S. Securities and 
Exchange Commission filings compiled by Symmetric show. 
    "Shipping has been in a terrible trough for a number of 
years," Chris Walvoord, global head of hedge fund research at 
investment consultant Aon Hewitt, said. 
    "Hedge funds 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 hedge funds 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, head of shipping at $1.5 billion hedge fund and 
shipping investor Tufton Oceanic  SHIP.L .  
    "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, oil 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  NAT.N , 
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 hedge funds of Dryships Inc  DRYS.O , which 
is active in dry bulk, tanker and offshore shipping markets, 
meanwhile, rose to 80 percent, from 10.3 percent.  
    Hedge funds had invested $308 million in Kirby Corp  KEX.N , 
$26 million in Nordic American Tanker and $9 million in 
Dryships. 
    Dry bulk firm Golden Ocean  GOGL.O  and oil transporter 
Teekay Tankers  TNK.N  were also popular as well as Ship Finance 
International  SFL.N , which has a diversified fleet, the data 
showed.    
    Funds had also invested $35 million to their holdings of 
Golden Ocean and $77 million in Ship Finance International. 
    Greywolf Capital Management, which initially invested in 
Tanker Investment before it merged with Teekay Tankers, is now 
among the hedge funds 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 spokesman 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 spokesman for Blue Mountain declined to comment. 
    Some hedge funds have started moving into liquefied natural 
gas (LNG) tanker stocks, investing $4 million in Dynagas LNG 
Partners  DLNG.N , and $62 million in Golar LNG Partners 
 GMLP.O  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) 
 ((Maiya.Keidan@thomsonreuters.com; 44 207 542 1594; Reuters 
Messaging: maiya.keidan.thomsonreuters.com@reuters.net)) 
 
Keywords: SHIPPING HEDGEFUNDS/