When Scorpio Bulkers announced a dramatic shift out of the dry trade into offshore wind installation early last August, many investors lost interest and bolted from the stock.
But the managers at Evermore Global Advisors only became more interested.
Not necessarily in immediately owning more of Scorpio, whose entry into operations in the wind turbine installation vessel (WTIV) market is still two years out.
Rather, they began to study the market itself and liked what they saw, particularly in the $100m November initial public offering in Oslo of an existing WTIV player called Cadeler.
Leopard changing its spots
“One of the things that spurred us to look at Cadeler was Scorpio Bulkers’ decision,” Evermore assistant portfolio manger Tommy O said.
“The investor and share-price reaction to Scorpio’s move was pretty poor. That was a leopard changing its spots, and everyone was puking the stock. We thought, ‘wait a minute, what’s the backstory?’ We started to do a lot of work on the wind space.”
The episode resulted in Evermore taking nearly 2% of the IPO, which saw sponsor Swire Group sell a portion of the former Swire Blue Ocean to investors, including a 20% piece to BW Group.
“The stock has shot up faster than we expected,” said Evermore portfolio manager David Marcus, noting nearly a 50% move from the NOK 23.50 ($2.30) IPO price.
“We’re not crying about that. But we really thought we’d have a chance to add more after the IPO, as we’ve seen other deals trade down or meander sideways. We like the company. We like the management.”
As for Scorpio Bulkers, Evermore did sell off about two-thirds of its stake over 2020, dropping from the equivalent of 580,000 shares in February to 197,000 by the end of the year.
“We decided we wanted to keep a position in SALT — we’re not exiting it,” Marcus said, using Scorpio’s ticker symbol.
“We want to be there for their transition, but it’s not going to happen overnight. They’re selling their bulkers today and they’ll be sitting on a pile of cash. But they don’t take delivery for two more years. I wouldn’t be surprised if we add to our position as they get closer to operations.”
