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Wilbur Ross Investing in Depressed Shipping Sector

By on August 24, 2011

It’s been reported recently that billionaire investor Wilbur Ross has shown interest in shipping stocks.

In an interview with Financial Times Ross stated, “The history of the industry is one that goes from immense prosperity to immense poverty and back again, and we think that’s going to continue. We’re not necessarily at the exact bottom of the cycle, but we think we are relatively close to it.”

Companies in the sector include Teekay Tankers Ltd. (TNK), Eagle Bulk Shipping (EGLE), Horizon Lines (HRZ), TBS International (TBSI), Frontline Ltd (FRO), DHT Holdings (DHT), and Seaspan (SSW).  HRZ and TBSI have fallen into penny stock land.

There is an ETF that tracks the sector, Guggenheim Shipping ETF (SEA).  A chart comparing it to the S&P 500 shows the devastation these stocks have experienced over the past year.

The Baltic Dry Index (BDI) has been in a short-term uptrend which could lend support to the sector. The BDI measures the price of transporting raw materials by sea.

 

Source: Bespoke Investment Group

One Comment

  1. Lou Skuntz

    August 25, 2011 at 12:12 pm

    Interesting. Be careful with SEA. It has a large container ship exposure. That portion of the shipping sector still has a lot of issues to deal with. Too bad there’s really no alternate use for these excess boats.

    Surprisingly, the cost of entry into the shipping business is quite low. That’s been the bane of the industry for decades.

    Reply

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