HohumYNWA's shipping basket Nov 2024

Investment Analysis Clubs Hohum's RollerCoaster Ride
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My bad. This is where i should have posted my shipping-related thoughts from two days ago. To summarize, prior to FRO’s Q3 2024 results on 11/27, I was lamenting the pounding shipping names were taking. Then FRO reported results, and answered questions during the earnings call. Q4 2024-to-date looks okay. But, the overall optimism on a great Q4 is fairly muted. HAFN reported a few hours later, and they too reported a similar trend - Q4-to-date is profitable. But, not a spectacular upside improvement.

Developments in the port for Nov 2024? Well, Oct 2024 showed weakness. But, Nov 2024 had almost every shipping idea cracking. Call ZIM the exception. ZIM had a nice gain at the start of the month, but then gave most of it back during the last 10 days. As the overarching beat-down was occurring, it caused me to reassess my FRO stake, and make a tough call - preserve the gains I had. Trimmed FRO, which in hindsight was a very good call, after results today.

Some tough choices to make on some shipping ideas to close out the year. Have to wait till 11/29 to post the monthly stats

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What a rough month! At the end of Oct 2024, with the dividend and realized gains, the shipping basket was clinging to gains and just black. Then Nov 2024, and many names just fell apart dramatically. Some end-of-month FRO decisions helped a little - but remaining FRO stake is now a red idea. CLCO really came undone with its dividend slash announcement during Q3 results.

What does the basket look like now?
FLNG 27.65% break even
TRMD 14.02% very red
INSW 12.37% very red
LPG 9.70% very red
FRO 9.41% red
BWLP 8.43% very red
HAFN 6.02% very red
CLCO 5.87% very red
The remaining 6.5% is comprised of TEN-PreE, ZIM, GOGL, ECO & ASC. The last two “very red”.

After such a rough month, it is hard to believe I still have positive shipping ideas. But indeed, four do make the cut. Do want to call out ZIM. The container shipping company is now profitable again, and ZIM mgmt decided to pay both a quarterly div and a special div. With container shipping continuing to improve, I expect Q4 will be good for most of the shipping companies in the segment. ZIM shares are Q3 ex-div next week. For Q3, I will accrue the div. For Q4, I will hope for a run-up prior to the div announcement- then sell prior to ex-div. That’s the plan.

For the shipping basket, there has been some chasing in Nov. But, the plump up has not been as much as Oct. In hindsight, much of Oct-Nov 2024 shipping basket capital has been about throwing valuable capital at downward spiraling names. Not pleasant.

I will end with a takeaway from FRO mgmt. In a prior earnings call, FRO mgmt had indicating the volatility of the tanker market needed a grounded attitude. Or, at least, something to that effect. Well, in the latest earnings call, when asked by an analyst for mgmt explanation of a lackluster Q4 (normally a stronger qtr), FRO’s CEO quipped - maybe, the stronger qtr shifts to the next qtr (or Q1).

I liked that observation. BTW, the shipping segments are at different phases currently. Container shipping is strong. LNG & LPG tankers weak. Conventional tankers are somewhere in-between. Not strong. But qtr-to-date is still quite profitable. Remainder of the qtr/year - no idea. Repeating the FRO CEO’s observation - maybe, it shifts to Q1 :slight_smile:

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