Tanker bears are dancing. Their thesis played out. They were right and they are happy to let you know.
They are dancing as if they were right. There is a difference between being right and being lucky. Let me give you an example.
Years ago, I invested in Premier Exhibitions. The company owned Titanic Artifacts that were “worth” about $200 million. I bought the stock when it had a market cap of much less. I doubled my money. Then, the stock went to zero. Was I right or was I lucky? I was lucky. I was completely wrong on the investment thesis.
Let’s take another example. I bought Oroco in 2017 for $0.04. My bet was that they were going to win the legals. The company won the legals and the stock was a 10-bagger for me. Was I right or was I lucky? I was right.
The next stage of Oroco thesis is that Santo Tomas will be bought out. Since the high of $0.60, the stock is down 50 percent. Am I wrong? I don’t know. Only time will tell.
Now let’s get back to the tankers. The bears are dancing because they think that they are right? Right about what?
Is the oil glut problem fixed? No. Are we done building floating storage? No. Are the tanker companies losing money? No.
Then what are you right about? Oh the stock prices are tanking. So what? That does not make you right. All it tells you is that more and more people are bearish and giving up.
It does not tell you that the tanker companies are not going to make good money over the next 5 years. It does not tell you whether the tanker supercycle is starting or ending. The answer to these questions will only be know years from now.
If you are confused about the tanker thesis, then read it below.