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