This time round big money thinks it has timed shipping investments right
Hedge funds believe that this time they have timed their
shipping investments right, after being burned five years ago.
The last influx of cash around 2013 saw over-ordering of
newbuildings slash equity prices by up to 80%.
Now is different as capacity shrinks, according to Tor
Svelland, chief investment officer at hedge fund Svelland Capital.
“They all came in too early,” he told Reuters
“It looks like the newbuilding market will not be able to
‘kill’ the positive demand story. This is a dream scenario.”
FFAs tempting funds
It is not only stocks that are attracting investors, but
freight forward agreements (FFAs) as well.
Demetris Polemis, a portfolio manager at $250m
Guernsey-based Paralos Fund, sees “some interesting opportunities for
investors”.
He added exchange-traded funds are being set up to allow
access to FFAs.
“A lot of people have been talking about shipping recently.
Last year, a few funds were setting up bespoke products,” said a London-based
hedge fund investor.
Data from Symmetric last week showed hedge funds pumped at
least $675m into shipping in the fourth quarter.
Duncan Dunn, senior director with FFA broker SSY Futures,
said a number of investment funds made bets on FFAs when the market started to
crash in 2008.
The estimated underlying transaction value of dry bulk FFAs
rose to $16.5bn in 2017 from around $9bn in 2016, he added.
“Last year’s improvement in time-charter rates was such that
not only will there be more hedging opportunity for dry FFA traders, but also a
compelling case for renewed investment,” he said.
source:
tradewinds.com