Shipping Stocks Try To Find Safe Harbors (SFL, FRO, OSG, NAT, SB, SEA)

November 4, 2008 by Douglas A. McIntyre

Cargo_ship_picIt is no secret that shipping stocks have been horrible performers of late.  In fact, they have made the dismal performance seen at some trucking companies look like trucking was a blue chip sector. 

A recent industry contact told us just how bad the shipping business has gotten.  A ship leased in May for a China departure was leased at more than 10-times the day rate that the same ship leased for in mid-October.  His comment was that it felt as though China was going to return to farming rather than building infrastructure and manufacturing facilities.

Ship Finance International Limited (NYSE: SFL) is up almost 8% at$15.32 after it canceled plans yesterday to acquire 3 vessels for $150 millionwith 12-year charters.  The company also named a new memberto its board with experience in shipping who is employeed by Frontline.The company’s 52-week trading range is $9.78 to $32.90.

Frontline Ltd. (NYSE: FRO) is also up huge today.  Shares are up 12% at$37.60, and its 52-week trading range is $25.00 to $72.36.

Overseas Shipholding Group Inc. (NYSE: OSG) was just upgraded at Oppenheimer yesterdaymorning.  Shares rose more than 10% yesterday and shares are up another7% at $45.00 this morning.  Its 52-week trading range is $32.54 to$97.79.

Nordic American Tanker Shipping Ltd. (NYSE: NAT) is seeing a 7% rise to$32.89, which is up 50% from its lows and right in the middle of the$22.00 to $42.00 trading range of the last 52-weeks.  This company’sChairman/CEO will be giving a CNBC interview this week on November 7.

Safe Bulkers, Inc. (NYSE: SB) is up big today after posting earnings of$39.2 million, or $0.72 per share, and after it declared a quarterly dividendof $0.475 per share for the quarter.  At that rate on a steady basis,shareholders are clipping more than a 20% yield if you believe that canbe sustained.  Shares are up 14% at $7.65 and the 52-week trading rangeis $4.16 to $19.23.   

An ETF which tracks shipping stocks is the Claymore/Delta Global Shipping (NYSE: SEA), and those ETF shares are up over 4% at $12.89 today.  It has only been public a limited time, but its trading range has been $9.00 to $23.60.

There are many many more shipping companies and many of these are notperforming well today.  But this sector has been battered and tatteredand it really looks like investors are using the recent strength andstability in the market to perform the analysis which they have beenscared to do for anything beyond the next hour.

The rebound in these stocks didn’t come quickly enough for Britannia Bulk, which is now apparently not trading in the US any longer.

According to a chart at Wikinvest, in May 2008 the Baltic Dry Index reached a record high level since its introduction in 1998, reaching 11,793 points.  In October this had fallen by more than 90% to around 851 points.  It is even lower today as letters of credit for shipping are harder and harder to come by.  These rates have never stayed down this  low forever.  That does not give any assurances that shipping stocks themselves will recover handily, but this looks like it is around the worst levels since the index was created.

Jon C. Ogg
November 4, 2008