Tanker Thesis Appears to be Evolving

by | May 20, 2020 | General | 0 comments

It seems to me that the tanker thesis is evolving. In 2019, the thesis was purely about supply and demand for vessels coming into balance and thus starting a new supercycle. As a result, the rates started to increase. Stock prices followed because investors did not want to miss out.

Then, Coronavirus hit, and these stocks sold off because demand for oil transportation was going to decline. Very quickly, investors got surprised because rates increased sky high because of storage and contango. Dumb money piled in. CNBC encouraged that by reporting a good story.

Then, contango flattened and rates declined. The dumb money sold causing the current shareholders a lot of stress and anger.

Now, it appears that the thesis is returning back to what it always was which is the start of the new supercycle. The following article says it all. No further comment is needed.

Here is an article that talks about this.

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About Mariusz Skonieczny

Mariusz Skonieczny is the founder of Classic Value Investors.