Diamond S Shipping Increased

By on April 28, 2020

DSSIToday I increased the allocation of Diamond S Shipping (DSSI) in the SMA Portfolio from 2.5% to 3.9%. DSSI was purchased at $14.50.

DSSI is a $600 million company and operates through two segments, crude tankers and product tankers. It provides seaborne transportation of crude oil, refined petroleum, and other production. As of December 27, 2019, it owned and operated a fleet of 66 vessels, including 15 Suezmax vessels, 1 Aframax, and 50 medium-range product tankers. The company is headquartered in Greenwich, Connecticut.

There is currently a lot of interest in the oil tanker trade by retail investors; perhaps too much. However, when I look at the valuations in this area it appears they could work for more than a few months. There is a tremendous amount of skepticism regarding this industry and rightfully so. The industry has suffered from overinvestment and lackluster results for years, punctuated by brief upturns.

Much depends on the level of contango in the oil market and whether we see a “V” shaped recovery in the economy. A quick economic rebound seems unlikely so there will continue to be a demand for storage in my opinion. This is a very volatile sector and really only suited for speculators.

I currently have open orders to purchase Scorpio Bulkers (SALT) and add to the position in International Seaways (INSW).

Disclaimer: It is very challenging to outperform a buy and hold strategy. Historically, investors have found themselves well-served over the long-term by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. All investors are advised to conduct their own independent research into individual stocks, closed-end funds, mutual funds, and exchange traded funds or any other investment vehicle before making a purchase decision. In addition, investors are advised that past performance has demonstrated no relation to future performance. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

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