With investors’ record interest in tanker stocks from April now confirmed to be over, just where exactly did those hordes of buyers go?
While that remains unknown, the answer is clearly not in other shipping stocks, according to a review of trading data by TradeWinds and US investment bank Jefferies.
Turnover in US-listed tanker shares spent another week at normalised levels, confirming the investor flow out of what had been a red-hot sector fuelled by scorching hire rates and a world oil glut.
But interest in dry bulk, LPG and LNG stocks also was trending down below three-month and six-month averages, meaning it is not a matter of interest leaving one shipping operating sector for another.
“Volumes have certainly been down across the space,” said Jefferies lead shipping analyst Randy Giveans.
“I think everyone is in a wait-and-see mode to see how quickly demand rebounds and what rates do in the coming weeks.”
As Giveans suggested, investor reticence may be understandable.
To the extent that shipping is a leading indicator for the health of world trade and economies trying to rebuild from the coronavirus pandemic, uncertainty about the level and pace of demand recovery is to be expected.
Volatility had enticed the surge of interest in tankers, which as TradeWinds has reported peaked at an average of 5m shares and $46m per day for each of the 10 wet-trade owners under Jefferies coverage.
But with contango in oil prices and floating storage opportunities disappearing more rapidly than expected, that sector appears to be heading for a long, hard slog after booking near-record earnings for the current quarter.
Investors retreat
That explains the investor retreat, but anyone looking for something else to buy within shipping’s operating verticals on the way out seems to have found slim pickings in markets that are simply depressed.
“It seems like investors are following the ‘sell in May and go away’ theme due to the uncertainty,” Giveans said.
One other clear lesson emerges from the Jefferies numbers.
Even now that their trading volumes have come back down to earth, tanker stocks are wildly more popular to investors than any other shipping operating sector.
Last week’s average turnover of 3m shares may be only 60% of the peak tanker volumes. But it is more than triple the combined volumes of 370,000 dry bulk owner shares and 454,000 LNG and LPG owner shares per day in the same week.
Turn to the dollar value of stock traded and the comparison is even more exaggerated. The tanker names averaged $23m worth of shares changing hands per day, a multiple of more than five compared to $1.75m for dry owners and $2.57m for gas players.
Dry bulk volumes are down from both their three-month average of 404,000 shares worth $2.1m per day, as well as their six-month average of 378,000 shares worth $2.8m.
It was the same in gas, with three-month volume of 681,000 shares per day and dollar total of $3.9m, as well as the six month average of 594,000 shares worth a total of $4.5m traded per day.
“Tankers historically have higher trading volumes than the other sectors,” Giveans said.
“It’s partially due to larger market caps, partially due to the ‘energy’ classification, and partially due to more trading data points and headlines for the group to follow.”
In numbers for the week, Herbjorn Hansson's Nordic American Tankers remains shipping's most popular stock in trading volume at 10.6m shares per day, while Scorpio Tankers trades more in dollar value than anyone at $36m.
