Norway’s Gersemi Asset Management sees positive signs in tanker and bulker markets after its shipping fund took a hit during a tough October for owners’ share prices.
The company said the fund lost 10.9% of its value month on month.
Gersemi’s shipping equity index was 13% lower during the month.
Chief executive Joakim Hannisdahl described October as “a month to forget for shipping longs”.
The fund entered October with a 71% gross and net exposure, but gradually reduced the net figure below 60% during the first two weeks of the month, amid elevated stock pricing.
“This shielded the fund from some of the general declines in shipping equities we witnessed from mid-month,” Hannisdahl said.
“However, both our dry bulk and oil tanker shipping equity indices were some of the worst performers in shipping during October, which also represented our largest long exposures and were thus the major reason for the fund’s negative performance during the month.”
Short positions in car carriers, container ships, LNG carriers and LPG vessels helped offset this.
These sectors also suffered significant equity declines last month.
VLCC supply thinning out
But Hannisdahl said: “We retain significant long positions in dry bulk and oil tankers, both equities and forward freight agreements [FFAs].
“We have lately seen very positive movements in spot rates and FFAs for capesize dry bulk vessels, which is favourable for our capesize-centric long positions.”
Gersemi also sees a thinning tonnage list for VLCCs.
Spot rates and FFAs have been edging up for these vessels, in line with seasonal patterns, Hannisdahl noted.
The fund was 47% invested in tankers at the end of October, with 28% in bulkers and 12% in containers.
“November has started off on a positive note for the fund’s performance despite the continued negative sentiment in shipping equities,” he said.
Seeing is believing
“Seeing is believing, and we believe a potential improvement in earnings for dry bulk and oil tankers could ease investors’ concerns and potentially reconnect some of the stocks to normal premiums/discounts to underlying values and cash flows.”
On Wednesday, Norwegian investment manager Tor Svelland criticised what he regards as too much negativity towards energy shipping stocks.
The founder of commodities and freight market hedge fund Svelland Capital believes tanker and LNG sectors can pick up quickly.
After several years of soaring rates, a number of vessel markets have cooled in the past six months, he pointed out to TradeWinds’ sister newspaper DN.
Svelland said “crazy” short positions have now built up in shipping stocks.
