The continued strength of boxship rates fuelled more gains for the New York-listed equities in that sector last week even as the larger shipping group took a pause from its robust start to 2021.
A 3% rise by containership stocks was not enough to keep the 32 stocks under coverage of investment bank Jefferies from dipping an average 0.2% on the week. Shipping lagged a 2.5% gain by the S&P 500 while slightly outperforming the 0.5% drop in the small-cap Russell 2000.
Jefferies index of shipping stocks is still up 38% year to date.
Most of the good news came in boxships, where a couple of the usual suspects in the weekly gains of late – Zim Integrated Shipping Services and Danaos Corp – came through again with surges of 17.3% and 10.3%, respectively.
An owner with both containerships and bulkers, Navios Maritime Partners, had the second-largest gain at 12%.
But the biggest rise by an owner not in the container trade went to New York-based dry bulk operator Genco Shipping & Trading at 6.2%.
Genco is a stock that may bear watching into the new quarter and beyond, in the estimation of Jefferies lead equity analyst Randy Giveans.
Giveans has just come off a non-deal roadshow in which Genco management updated the exit of large private-equity holders — dubbed "Prexit" — from the stock.
Genco's largest three holders — Centerbridge Partners, Apollo Management and Strategic Value Partners — are down to a combined 20% stake, from 58% in December and 33% at 20 January at the last update from chief executive John Wobensmith.
Consider Giveans among those who back Wobensmith's view that this is a good thing. A broader shareholding base means greater trading liquidity and less "overhang" pressure on the stock from selling expectations.
But Giveans also maintains that the selling to date has kept Genco shares from riding up as fast as some dry bulk peers.
"Genco's problem for awhile has been trading liquidity. It's been pretty weak because of all these large holders," Giveans said.
"While the selling is a good thing, it's also caused them to lag behind their dry bulk peers like Star Bulk and Eagle Bulk in terms of share price. They're at a bigger discount to NAV at some 25%, and a big part of that is the Prexit selling."
Jefferies has a buy rating and a $13 price target on Genco, which was hovering around $10.85 in Monday morning trading on the New York Stock Exchange.
Tankers stocks took the biggest hit in last week's trading with a 3% drop as rates remained tepid. Dry bulk owners edged up 1%, while the gas carrier owners traded flat.
