A recent comment in the blog made reference to DryShips Inc (NASDAQ:DRYS), perhaps wondering if the Marine Freight (GICS:20303010) and Ports (GICS:20305030) industries are so deeply over-sold they represent a Value play in the market today. Maybe the comment came because of the incredible leap (followed by collapse) in the shares of DryShips?
http://www.4-traders.com/DRYSHIPS-INC-30546720/
As I hear it, the ocean liner (container) shipping industry continues to self-destruct. Moreover, President-elect Trump is creating possibly a tsunami wave for shippers if he continues on about applying duties and tariffs on foreign-made goods being purchased by Americans. Experts believe it will be 2018 at the earliest before the industry sorts itself and moves back into meaningful profit again. By then, the major ills of the global economy may also be sorted, the major liner companies will be amalgamated or sunk, and all the mega-ships presently under construction will have been delivered. Ergo, the table is being set.
So, with difficulties noted, the earliest I would venture into even the most carefully selected stocks in these industries would be 4Q2017. To do so, at least for stocks having more than $1 billion in market cap, will require a brokerage account with direct access to capital markets outside the U.S., such as NASDAQ OMX COPENHAGEN, SHANGHAI STOCK EXCHANGE, TOKYO STOCK EXCHANGE, and a couple others. By then, however, the entire capital market in the world may have a different look.
My research shows me that industry consolidation continues rapidly, e.g., Hamburg Sud is being acquired by the industry giant Maersk and the three big Japanese lines. MOL (Mitsui OSK Lines), NYK (Nippon Yusen Kabushiki Kaisha) and K Line (Kawasaki Kisen Kaisha) are merging, all ready to go by April 2018. A few years ago, this merger would have been highly improbable because of cultural reasons (pride, face, etc).
http://www.4-traders.com/AP-MOELLER-MAERSK-A-S-1412885/
http://www.4-traders.com/MITSUI-OSK-LINES-LTD-6491274/
http://www.4-traders.com/NIPPON-YUSEN-KABUSHIKI-KA-6491189/
http://www.4-traders.com/KAWASAKI-KISEN-KAISHA-LT-6491394/
Most of the US-listed marine industry stocks are small cap. Here is a list:
Seaspan Corporation (NYSE:SSW) http://www.4-traders.com/SEASPAN-CORPORATION-14483/
Nordic American Tanker Ltd (NYSE:NAT) http://www.4-traders.com/NORDIC-AMERICAN-TANKER-LT-13682/
Costamare Inc (NYSE:CMRE) http://www.4-traders.com/COSTAMARE-INC-6830660/
Capital Product Partners L.P. (NASDAQ:CPLP) http://www.4-traders.com/CAPITAL-PRODUCT-PARTNERS-47497/
Tsakos Energy Navigation Ltd. (NYSE:TNP) http://www.4-traders.com/TSAKOS-ENERGY-NAVIGATION-14634/
DHT Holdings Inc (NYSE:DHT) http://www.4-traders.com/DHT-HOLDINGS-INC-11105059/
Scorpio Bulkers Inc (NYSE:SALT) http://www.4-traders.com/SCORPIO-BULKERS-INC-26390932/
Danaos Corporation (NYSE:DAC) http://www.4-traders.com/DANAOS-CORPORATION-34322/
Star Bulk Carriers Corp. (NASDAQ:SBLK) http://www.4-traders.com/STAR-BULK-CARRIERS-CORP-28710714/
Navios Maritime Midstream Partners LP (NYSE:NNA) http://www.4-traders.com/NAVIOS-MARITIME-MIDSTREAM-18474994/
Diana Shipping Inc. (NYSE:DSX) http://www.4-traders.com/DIANA-SHIPPING-INC-12365/
Eagle Bulk Shipping Inc. (NASDAQ:EGLE) http://www.4-traders.com/EAGLE-BULK-SHIPPING-INC-30531881/
Of all these companies, the only one whose executives I have met (and written about several years ago) is Tsakos Energy Navigation Ltd. (NYSE:TNP). But I have no connection with them now other than possibly an interest in reconnecting sometime in 2017.
Clearly for most of you, there are easier ways to manage your portfolios. Still, I will try to stay on top of this research because, without material improvement in the ocean shipping industry I cannot see how the global economy improves much.
I am also interested in this industry, as I was in the Heavy Oil industry, because it does represent an opportunistic Value play at the right time. As it has been with my foray into Heavy Oil, the operative word is timing.
All the best for the season and for 2017,
/Bill