Private Scorpio Holdings has revealed a 5.33% holding in fellow product tanker owner Ardmore Shipping, but it does not appear to be consolidation that is on the mind of the Monaco-based outfit.
Rather, Scorpio is inspired by what it considers “an inflection point” in clean product rates over the past couple of weeks and has also ramped up its holding in a second peer — Hafnia Tankers of Denmark — according to Scorpio Tankers president Robert Bugbee.
“We feel we’re seeing an inflection point in the market and thought investing in two of the leading owners was an excellent way to play that trend,” Bugbee told TradeWinds in response to the filing after close of trading on Monday.
Scorpio Holdings — through largest shareholder Annalisa Lolli-Ghetti — has bought 2.3m Ardmore shares, exceeding the 5% threshold that triggers a filing requirement. Lolli-Ghetti is the mother of Emanuele Lauro, who is chief executive of the private Scorpio Group and public company Scorpio Tankers.
Scorpio Tankers is one of the world’s largest public owners of product tonnage with more than 100 tankers in its fleet.
All of the Ardmore shares were acquired in the past couple of weeks, Bugbee said. At Monday’s closing price of $14.08, the Ardmore stake is worth more than $32m.
Ardmore is often considered a perennial consolidation candidate, so the stake taken by Scorpio Holdings is bound to raise some questions about the larger company’s intent.
However, the filing is made on the US Securities & Exchange Commission’s form 13G — “G for good”, Bugbee quipped — a form that is used when the investor’s intention is passive investment purposes only.
As for Hafnia, Scorpio Holdings has not reached the 5% level that would indicate a public filing, Bugbee said. However, it has “quintupled” a previous stake in the Oslo-listed owner just in the past 10 days based on improvements in clean product dynamics, he said.
Scorpio Tankers has been a significant buyer of its own shares as well. It spent nearly $40m in one week alone in early June and has a pending $250m authorisation.
It is natural for some to wonder why Scorpio is buying up shares of peers rather than Scorpio Tankers stock, Bugbee acknowledged, but he explained that certain restrictions under US securities law create black-out periods when insiders are not allowed to buy, but can buy outside the company.
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