Comments
Transcript
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DEDoes anyone in here have an opinion on the exit strategy for the tanker stocks? I am up 20-40% on most of them.. Just want to be realistic in profit taking. Thanks for any ideas on this
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NGAnyone know where I can view the steepening of the contango on oil? Looking for something like vixcentral.com but for oil.
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VBSince the index doesn't replicate the right thing here, I am just buying a basket myself. I'd go for ones that have a large % of their assets in VLCCs and ULCCs o/w a high % should be spot charters. I've identified FRO INSW EURN DHT as the best suited. FRO - new fleet av. 4 yrs, great management, highly levered and high premium to asset value, high EV per DWT. INSW - av. 8y old fleet, trading at discount, half the leverage of FRO, good management, "cheap" valuation based on negative EPS in the past, but I think this company is gonna take-off and is very well positioned. Debt restructured and significantly reduced EURN - similar to INSW with better opearing performance and EPS figures historically, imminent debt maturities though, trading somewhere inbetween FRO and INSW DHT - trading similiar to EURN, bit more debt, pure VLCC fleet similar age as EURN (8 years), stable historic earnings Nordic American only has Suez Max's. Mila is too diversified. LPG is mainly gas. Teekay too diversified. DSSI vessels are too small. The following are too small or too diversified: Tsakos, SFL, Kawasaki Kisen, China Cosco, Scorpio. OSG too risky.
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arCan someone play the devils advocate and explain what is the worst case scenario for this trade?
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TCAnswer: 8 stocks - EURO, TNK, FRO, NAT, DHT, INSW, STNG, DSSI April 6 well worth the read: https://seekingalpha.com/article/4336308-nordic-american-tankers-limited-first-half-of-2020-will-be-blowout
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TCAfter much time and research, I'm a reluctant convert. Two solid observations: 1) Oil demand has plummeted at previously inconceivable levels; likely lower by 10-20 million bbd for at least 2-3 more months by everyone's accounts. Then, demand doesn't come back to 2019 levels for at LEAST 1 year 2) Joe public doesn't understand that SUPPLY cannot suddenly switch to match lower demand numbers. Too much inertia. Corps have hedged millions of barrels at $50+ and so will happily keep churning it out. Cash strapped corps will take $10/barrel rather than zero cash flow and breach debt covenants; sovereigns still need to pump to keep economies running and populace placated. Expect plenty of tweets and headlines that attempt to raise oil $. No doubt, MBS and Putin will quickly say they'll reduce supply. It'll work for a week or 2. But they can't do it hard, or fast, enough. Only: which stocks to put in your 'basket'?
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MHThis guy is extremely arrogant. Really enjoyed his perspective on covid re not being conducive to playing golf, flying private jet
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KKHas your view on this trade changed after the announced production cuts from Russia and Saudia Arabia?
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GBwaiting for the market selloff to go into these.
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SPJust wondering, did the solution for complaints that video take too much time to get release, is just removing the filmed date ? Could we know when this was filmed ?
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MCDry bulk rates have plummeted due to the Covid-19's impact on trade. If prolonged quarantine is not priced in, dry bulk rates would decrease further as demand is further contained. Unfortunately non-oil shipping was not covered in this video. Is this a threat to the investment thesis?
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AEAccording to this article written 20th March, the oil price is not quite low enough to make this work yet: “We’ve heard numbers of $18 - $25m…to charter a VLCC for one year,” and then added: “That would equate to $9 per barrel to $12 per barrel on a 2m barrel VLCC…the current contango curve on Brent oil, is around $10 per barrale on a 12 month basis.” What this means is that the lines are only beginning to cross; floating storage is on the cusp of becoming economical. https://www.seatrade-maritime.com/tankers/oil-prices-vlccs-and-floating-storage
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KFOSG FRO STNG TK TKG. Any one have a ranking of these ?
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TTPhenomenal interview with incredible points and observations by both. I do wish I had a better grasp on the probabilities of deflation or inflation.
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GSThis is crazy.. eg SAGA Tankers has a estimated P/E at 0,14 and P/B at 0,64 atm....,
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GDI don't think Vitol and Glencore will give away all the contango trade for two reasons: 1. they own their own fleet and 2 the way it works you pay a storage fee to hold crude in the vessel. Other cost he didnt talk about is the cost of holding the oil. You need Balance sheet, difference is that this time compared to 2008, apart from Macquarie no other bank will hold oil on the water. So financing is going to be a big deal here, Vitol and Glencore and not going to hold oil on the water just using their own equity - unless they can make over 20% which is their internal cost of fund (for equity usage).
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DRBDRY is dry shipping. What basket is he talking about for oil? Or is he thinking that old dry shipping boats can somehow be repurposed quickly to store oil? Confused.
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CHBDRY chart shown. It is an ETF with a portfolio of dry bulk freight futures. Its price has tanked (pun intended). How is this at all related to companies who lease their tankers for oil storage?
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DWTeekay Tankers (TNK)
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AMLove this guy's chutzpah. Very entertaining guest.
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CLIt is just funny to hear that: How will US shale oil producers be impacted?...Right??? We can print money in America--........and we end up just gaining market share. But that's a long process. They'll send my tankers to Pluto.
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CHMy selection of VLCC play stocks for now: DSSI, INSW, EURN Indirect: DHT If you have any better ideas to add on diversification, please add them :)
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STTruly excellent 17 minutes - thanks a lot
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DHI wish he had talked about the price of oil from here, not just storage problems. But the inference would be oil should fall in price.
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AEI wonder does anyone know if chemical tankers could be pressed into service to store oil when the fees go sky high? A quick google reveals that the differences between oil and chemical tankers are not too huge but I’m ignorant of the requirements really. They wouldn’t need to be actually transporting the oil so a country like Russia could ease regulatory requirements to get the job done. Aren’t they under pressure to avoid having to close their pipeline? Converting sounds a bit extreme but from what I can see it can be done and amazing things happen when there are hundreds of millions to be made, so I expect this could act as a longer term ceiling on the fees.
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DMI like the way this guy talks and thinks.
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kmloved it.
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AHGreat interview, but the guest is missing lots of items such as VLCC's being locked in prior to the rate surge, billing in ton-miles not in tons. https://www.hellenicshippingnews.com/crude-tanker-stocks-plunge-as-rates-hit-record-highs/
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AHI find this thesis amazingly compelling. Not sure that it is right, but highly interesting. I had previously moved some money into tankers, continued moving into more today.
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GCIm enjoying all the recent oil views. More please!
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SCIf peak surplus is in 150 days time, and we're going to awash in 2 Billion barrels of oil, wouldn't selling Oct Crude at $32 be a better trade?
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JLWhy BDRY? Dry bulk isn't the same as oil... are there any oil tanker ETFs?
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BDHarris is right about the tanker market. What I'm interested in now with tankers is how the High Sulphur Fuel costs are going to be impacted vs the Very Low Sulphur fuel for tankers going forward. Whether refineries will change production once the economies come back online collapsing spread or not. (Im long a few Tanker companies because I just cant get over the comps and return while everything is in a bear market)
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AHGreat interview, but the guest is missing lots of items such as VLCC's being locked in prior to the rate surge, billing in ton-miles not in tons. https://www.hellenicshippingnews.com/crude-tanker-stocks-plunge-as-rates-hit-record-highs/
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jRKuppy always a great interview.
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MMTKN
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AEOh yes and of course due to the slowdown, there should be surplus supply of empty chemical tankers.
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MBMore Kuppy! Always more Kuppy.
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JDMore from Harris please! Not only does the oil sector not get enough exclusive focus on RV (I know there is a lot to cover these days!), but he's good old fashioned entertaining and charismatic.
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EPGreat presentation, but you've used a chart of dry bulk shipping (13:40) which has no relation to the tanker market.
Chapters
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How is COVID-19 impacting oil supply?
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Where is the excess supply going to end up?
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How does storing oil on an oil tanker work?
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How will more tankers going into storage impact tanker charter rates?
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Is this priced in?
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Can the Saudi's new oil war impact your thesis?
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What if quarantines end early?
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What is the earliest you think this global oil demand slowdown ends?
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What is the impact of the US saying it will refill the strategic oil reserve?
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How much can producers cut supply?
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How does this compare to oil shocks in the past?
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How do you play this thesis?
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How will US shale oil producers be impacted?
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What are the most important takeaways for viewers?