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1/
In shipping money is made by finding cheap optionality. It’s an inefficient market that on occasions give you great opportunities.
For me the greatest optionality is now to be found in #drybulk equities.
In shipping money is made by finding cheap optionality. It’s an inefficient market that on occasions give you great opportunities.
For me the greatest optionality is now to be found in #drybulk equities.
2/
Let’s take a look at $gogl. As reported in their previous presentation, they are currently making $8k more than index rates due to premium fleet and scrubber. With a cash break even of 11700 the company only need $4k index rates to survive another day.
Let’s take a look at $gogl. As reported in their previous presentation, they are currently making $8k more than index rates due to premium fleet and scrubber. With a cash break even of 11700 the company only need $4k index rates to survive another day.
3/
Compare that to a forward curve well above 16k/d in 2024 and 2025. Some would argue these forward rates are not sexy, but you are missing the point. With a record low order book and increasing regulations you should not be investing in the sector to collect 10-15% div.
Compare that to a forward curve well above 16k/d in 2024 and 2025. Some would argue these forward rates are not sexy, but you are missing the point. With a record low order book and increasing regulations you should not be investing in the sector to collect 10-15% div.
4/
You invest for the optionality.
Back of the envelope dividend potential Gogl:
Cape 50k & Pmx 35k = 55%
Cape 75k & Pmx 50k = 95%
Cape 100k & Pmx 75k =140%
You invest for the optionality.
Back of the envelope dividend potential Gogl:
Cape 50k & Pmx 35k = 55%
Cape 75k & Pmx 50k = 95%
Cape 100k & Pmx 75k =140%
5/
“This will never happen again”
Well if it doesn’t happen then orderbook will not expand, eventually fleet growth will be negative and it will happen.
Question is timing, and that leads us back to the low break evens.
“This will never happen again”
Well if it doesn’t happen then orderbook will not expand, eventually fleet growth will be negative and it will happen.
Question is timing, and that leads us back to the low break evens.
6/
Conclusion: The current setup in drybulk provides an “option” with a positive carry(!)if you can stomach market to market downside risk.
Risk: China China China China
Conclusion: The current setup in drybulk provides an “option” with a positive carry(!)if you can stomach market to market downside risk.
Risk: China China China China
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