Our first conversation with George Economou came nearly 25 years ago and it had to do with junk bonds.
Economou’s Alpha Shipping had defaulted on $175m in high-yield notes less than 12 months from their issue in 1999, and he was in talks with bondholders about a resolution.
Economou wasn’t yet the legendary Greek shipping magnate he is today, and we were still getting our feet wet in the arcane world of ship finance.
A question we asked must have suggested we thought Economou was hard put by the circumstances because it triggered him. The conversation suddenly stopped in its tracks.
“I understand what’s happening here and you don’t,” he said abruptly.
It didn’t take us too long to realise that Economou was exactly right. He was on the verge of buying back the bonds at pennies on the dollar while managing to retain most of the fleet — in reality, a great outcome for him if not for the par investors.
It was cold comfort that we were far from alone in failing to understand things quite as early and quickly and clearly as Economou, a man who has spent time ahead of the curve throughout his career.
This is all said to set some context for the resurgence of Economou on the public stage over the past year.
There is only one George Economou shipping tycoon. And we mean that quite literally because at times these days, it seems surely there must be more than one.
“He seems to be everywhere,” marvelled one public company executive this week, while another remarked, “I think George has been taking energy pills.”
He is ordering tankers, he is ordering gas ships, he is ordering bulkers. He has even hired away the chartering staff of a major operator in the dry bulk sector.
But it’s what Economou is doing as an activist investor in the past year that has brought him front and centre as a focus for Streetwise — and perhaps for some nervous public-owner management teams who have come into the Greek’s crosshairs in recent months.
Buying stock is one thing. Economou has taken significant stakes in four public companies: Performance Shipping, OceanPal, Seanergy Maritime and Genco Shipping & Trading.
All but Performance have come in dry bulk, where public shares have traded below net asset value. The market’s been expected to move up, and in fact, has since Economou’s taken his positions. All pretty logical: a smart investor making smart investments.
It doesn’t stop there, though, and that’s where the activism comes in. Economou is not just a passive investor in these stocks. He’s picking fights. He’s calling out governance violations, he’s naming names, he’s demanding the heads of board members and executives.
Economou is waging battles he seemingly can’t win. But before Streetwise gets too convicted on that point, the junk-bonds memory comes wafting back. We may not understand what he’s doing, and you may not, but rest assured that Economou does.
The shipowner was back in the news in a big way in the past week.
He filed a lawsuit against Seanergy, chief executive Stamatis Tsantanis, and company directors over their approval of a December 2021 transaction in which Tsantanis bought 49.99% voting control of the company for $250,000. At the time, Seanergy held assets worth $487m, per the complaint.
Economou wants a proxy fight in which he’d nominate new Seanergy directors but admits in the court filing that he can’t win it unless a Marshall Islands court invalidates Tsantanis’ purchase of the super-voting shares.
It’s the second public owner Economou has sued, following his November action against Performance in the New York Supreme Court also targeting a dual-class ownership structure. Economou wants to buy the company, but overwhelming voting control by insiders blocks his way.
Detecting a pattern here?
There continues to be a delicious irony in Economou’s later-in-life emergence as a governance cop.
Whatever one thinks of the Alpha Shipping affair, it was just an appetiser for Economou’s main course in US public markets: the 14-year run of DryShips in New York between 2005 and 2019.
DryShips went from a wild success for many early investors to the company that later brought massive dilutive share issuances through the mysterious Kalani Investments, resulting in litigation that claimed the destruction of 99.999% of share value.
Ultimately US investors had seen enough of Economou and the Greek took DryShips private in 2019 — unsurprisingly at a discount to NAV.
So it is the same Economou who routinely had DryShips at the bottom of analyst Michael Webber’s corporate governance “scorecard” that is now hot and bothered by alleged governance breaches at Seanergy, Performance and OceanPal.
It may be a “takes one to know one” scenario as none of the three are known as beacons of governance practices: Seanergy is 52nd of 64 companies in Webber’s current rankings, and neither Performance nor OceanPal even made the list.
That provides a segue to the other piece of Economou activism news of the past week, and it’s about the Genco investment. It’s an interesting one for Economou because Genco is not such an easy governance target. In fact, it’s finished at the top of Webber’s rankings for the past three years.
Economou is trying to wage a proxy fight anyway. It hasn’t started well as Genco slapped down his two director nominees — finance fixture Randee Day and executive Robert Pons — while appointing its own selection: Rio Tinto veteran Paramita Das. She becomes the third woman on the seven-seat board.
No one is betting on Economou going away quietly. Not at Genco, not at Seanergy, not at Performance and not at OceanPal, where another proxy fight is looming.
Economou has his investments, he has his grievances, he has his lawyers. And to be sure, he has a plan, even if the rest of us don’t quite understand it yet.
