Iran War Has Pushed Global Shipping Markets To The Brink | Ed Finley-Richardson

If China puts pressure on Iran to let its vessels out and to go in and get new cargos, then in Saudi, in Iraq, in Kuwait, they're going to drain those storage tanks, it's going to be like a feeding frenzy at the zoo.

Books will be written about how profitable the shipping industry is right now. And when it comes to tankers,

right now. And when it comes to tankers, yeah, every shipping company I've discussed so far today with you is going to have an amazing Q1 and an amazing start to Q2. And I feel like the really

non-consensus view is that we are not bullish enough on oil tankers. The

straight of hormones is too big to fail.

The worst case scenario for the tankers and for the macroeconomy is if we have this kind of almost full closure which becomes semi-permanent. That's a

becomes semi-permanent. That's a disaster. If this disaster goes on too

disaster. If this disaster goes on too long, people are just not going to want to pay those prices. It's going to get to a point where everything that we take advantage of and take for granted in daily life, it's going to really be compromised. I think where this gets

compromised. I think where this gets really depressing is either if we have an extreme escalation on the part of the US and Israel which then leads to a counterattack which permanently takes

some of those Middle Eastern resources offline that is going to become a historic disruption which could cause a cascading macronomic effects and then shipping stocks going down will be the least of our worries.

The oil market and the fertilizer market have been essentially broken by the closure of the strait of Hermuz. But

it's not just that. With war in the Middle East, cracks are forming in the shipping industry itself, particularly the tanker market that transports crude oil and refined products around the

globe. My guest today lives and breathes

globe. My guest today lives and breathes shipping. Ed Finley Richardson began

shipping. Ed Finley Richardson began thinking hard years ago about what a closure of the straight could do to shipping markets and the opportunities it might create for shipping investors.

With shipping prices surging 2x, 3x, in some instances 10x normal levels, I wanted to see what's really going on in one of the world's most important markets. At the risk of sounding

markets. At the risk of sounding immodest, I really don't think you're going to get an interview like this anywhere else. Monetary Matters

anywhere else. Monetary Matters listeners can get 20% discounted access to Ed's research service, Misadventures in Shipping, for monthly and annual using the link in the description. If

you're interested in shipping and shipping stocks, it is worth checking out Ed. He's one of the best shipping

out Ed. He's one of the best shipping analysts alive. subscription includes

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Let's get into it. I am joined today by Ed Finley Richardson who is an expert in the shipping industry. He has been tracking all of the rates, all of the different types of ships and uh

potential investment opportunities. Ed

is the author of the misadventures in shipping Substack. Ed, so glad you're

shipping Substack. Ed, so glad you're here. Welcome to Monetary Matters.

here. Welcome to Monetary Matters.

Thank you. The conflict in the Middle East has caused the price of oil, refined products, and many other things, including fertilizer, to skyrocket. Many

people know that, but what my people might not be as aware of is that shipping has gotten a lot more expensive as well. How would you describe the

as well. How would you describe the closure of the straight of Hormuz? How

has it affected shipping availability and pricing within the strait and then worldwide? Well, I think the first thing

worldwide? Well, I think the first thing to highlight is that the Middle Eastern Gulf is really the epicenter of a lot of commodities trades in particular having

to do with energy and we've just taken for granted that yes there is a choke point but that trade has always been fluid through it has never been uh disturbed for longer periods of time.

There's been a conspicuous example of a war in the 1980s but trade was still able to continue. So uh we had price shocks but never quite anything like we

have right now. And I think markets had discussed this. They had talked about

discussed this. They had talked about it. Even I had written an essay about it

it. Even I had written an essay about it two years ago where I anticipated exactly how it would affect oil tanker markets in particular. But I still thought it was a very low probability

event. And seeing it unfold is just

event. And seeing it unfold is just surreal.

So what's happening is obviously there are ships that are trapped. So that

takes away vessel supply. But really the biggest kind of panic is from the fact that the Far East which is the largest

consumer of most of these commodities both as an industrial refiner of certain of them of the ores and sending them back to the west but also the ships

which can replace those volumes are largely in the west side of in the western hemisphere. So the US Gulf

western hemisphere. So the US Gulf particular is a large producer now thanks to the shell revolution of crude oil but also of natural gas liquids and

so it's just creating a huge disruption where things have to come from a lot farther away and so that also implies that there's a time delay which is very problematic and because there's so much

uncertainty people are just in panic mode so uh the far east is not able to produce its own refined products So it has to source them from farther

away and there are just endless knock-on effects. So all of that's playing out in

effects. So all of that's playing out in shipping and to make a long story short that is profitable for ship owners because they tend to absorb

inefficiencies for themselves. It's

really the one part of the market that loves inefficiency.

Inefficiency usually tends to lead to friction which tends to lead to margin uh contraction for many businesses. But

in shipping uh greater inefficiency leads to margin expansion which is an interesting dynamic. It's a very

interesting dynamic. It's a very dangerous uh myth let's say to say that all disruption is positive for shipping because you need to be more nuanced than that. You need to figure out exactly

that. You need to figure out exactly where the replacements will come from whether there's enough of it. But in

this case, it has been largely positive in the sense that shipping companies are doing very strange voyages, very very far distances. They're being booked

far distances. They're being booked farther in advance. They're being paid three, five, 10 times what they normally would be. And so they're really

would be. And so they're really benefiting from this situation.

In your career or the careers of your your mentors who are 20 or 30 years older, has there ever been something like this? How does this compare? Just

like this? How does this compare? Just

how drastic is the situation? and

precisely you know what and then we'll get into what is going on of where where the prices are are going up the most.

I think what's really unusual about what's happening now is that normally these shocks are relatively short-lived.

So you'll see some events like for example when the Houthis attacked the largest Saudi oil field in 2019. That

was an event which sent spot rates for the largest crude carriers from something like $30,000 a day to over $200,000 a day in the span of a week. So

it was extreme. And just as quickly as it went up, it dropped. So actually the reason why tanker freight rates went up so much is because US treasury sanctioned blanket sanctioned one of the

biggest tanker companies in the world Costco which is a uh state related entity in China and everyone panicked so much because it was such an extreme action this was during Trump's first

administration that there was just a scramble to get ships and then people figured out that it wasn't going to be the end of the world. I think what's really unique about what we're seeing now and different than most of these

disruptions which tend to be short-lived is similar to the Red Sea disruption with the Houthis these disruptions are just lingering on and on and the same

way that you know Europe has uh forsaken Russian energy imports so whether it's diesel or crude oil the euros barrels to their refineries all that Russian energy

is now going halfway around the world to China India and this has been a persistent change in trade flows which on on paper makes absolutely no sense.

Like if you wanted to make markets efficient the last thing that you would do is take Russian barrels and send them to India. I mean it's just it's stupid

to India. I mean it's just it's stupid you know it's completely inefficient but that's where we are. You know it's big because you have to go all around Europe all around Africa. It's it's a long trip.

It's a long voyage. Yeah. Now, some of those operators part of what we call the dark fleet are actually they feel safe going through the Red Sea. So, in other words, through the Swiss Canal and they

they shave off about 12 days by doing that. But I think that, you know,

that. But I think that, you know, getting back to the the kind of the crux of your question. What's unusual about what we're seeing now is we could imagine this persisting a lot longer.

And that's something which you know it's it's kind of like the way that when oil spikes these days you have all these uh speculators who rush in to sell the volatility because they just assume that

there's no way this volatility could remain high and it's become such a knee-jerk reaction and a very dangerous one because they're not really thinking

it through. Um there's been I've no I

it through. Um there's been I've no I communicate with some oil traders and they seem to think that oil is still underpriced even today uh with Brent

going above you know$1 $10 a barrel and I see a very logical argument for that in the sense that Iran really has the Trump administration by the balls here.

Um this is a very tricky situation, extremely dangerous, probably going to be difficult to do anything by force. Uh

not just that, but even China, who was Iran's biggest customer and best customer and imports something like 90% of its crude oil,

even they don't seem confident sending their takers, which are laden with cargos, sitting in the Gulf. Even they

can't get them through. So that's very strange and points to the fact that people are genuinely worried about the danger and the risk involved with

sailing through. So that seems to point

sailing through. So that seems to point to the idea that Iran whether purposely or maybe even uh of its own surprise has

discovered a pressure point leverage that it can use and it seems very uh reluctant to let that go. They want the world to witness how powerful it is and

how they can single-handedly uh damage the world economy. So that

kind of argues for a slower resolution and that's pretty scary.

How many ships roughly are going through the straight of Hormuz per day? I know

it's you higher than zero but well below the 150 you know before before this crisis and just how just how damaging and disruptive is that and and and talk

about the that disruption.

Well, the irony in all of this is that Iran has managed to continue to export its own oil. It hasn't been exporting as much LPG as it normally would. Uh I

think a lot of people petroleum gas.

Yes, liqufied petroleum gas. you know,

everyone's so focused on the oil aspect that, you know, I think the LPG is not as well known a part of the trade story.

But just as there is a dark fleet of oil tankers which are either owned by Iran directly or by uh interests, let's say

intermediaries who uh might be sanctioned by the US Treasury but carry the hydrocarbons all the same. Uh

there's also something like 15% of the very large gas fleet which is dark fleet in the same way and constantly shuttling

thousands of cubic centime of meters of of gas volumes. It's big business very important to petrochemicals in the east

in particular in China. And so in a way it's been good that Iran's been able to continue to export because that's taken, you know, that extra 2 million barrels of pressure off markets.

Uh but very few shuttle uh excuse me, very few ships have gone through. I've been

surprised. I was expecting there to be more risktaking. I think the fact that

more risktaking. I think the fact that Iran indiscriminately attacked vessels of uh various interests from interests

which were effectively tied to the US to uh really vessels from all around the world created a sense of panic and uncertainty and successfully dissuaded

people. So actually the attacks really

people. So actually the attacks really uh fell off in the last 10 days. It it

seems to have been enough to to do all those attacks up till about the 20th of March. Now we're seeing anywhere from

March. Now we're seeing anywhere from two to 10 vessels go through per day.

It's quite varied. And the other thing is the vessels are turning off their voluntary AIS signaling, which means that sometimes we only know that a vessel has gone in or out after the

fact. So typically what they'll do is uh

fact. So typically what they'll do is uh they'll decide to to to cross and then 10 days later they'll turn their AIS back on. Sometimes less, sometimes 5

back on. Sometimes less, sometimes 5 days later, but then we'll say, "Oh, wait a minute. you know, there was a break in the action here. I could see via my archive of the satellite that it was here and now it's here. So, we can

deduce therefore that it did move in and out. But even people who watch satellite

out. But even people who watch satellite imagery, if it's a cloudy day, we don't know. So, we have basically satellites

know. So, we have basically satellites and these AIS and there's not much else to go by. We don't have photographers sitting there, you know, snapping snapshots of vessels as they're going by and identifying them that way. that

would be wonderful but at the moment we're stuck using these kind of limited tools. So anyway to to come back to your

tools. So anyway to to come back to your question it is quite limited. I'm

surprised by that. I think that Iran is pleased about that. I think that if we were to see an increasing trickle of vessels, I think that would be seen as

Iran's leverage dissipating. And I think that maybe that would help take away the fear factor of vessels being able to choose the leave or take the chances because they could potentially be paid a

lot of money to go through. I mean,

there are offers being made, but they seem to really be taking the danger seriously.

I would have thought that some shipping companies would have been impacted. I

mean, it must be very bad to have a ship that's trapped in the middle of the straight of Hormuz, right? Is is that impacting some companies or No, it is definitely. I guess the way I would think of it is even though there's

a lot of ships trapped, it's usually just a a bad accident and it's only a couple of ships that are trapped out of a larger fleet. The larger players, you know, most of the publicly listed

companies have at least 20 vessels. Some

of them have up to a hundred. So if they have one, two, in some cases even four vessels trapped inside, it's true that they're, let's say, missing out on a month of earnings, they're not being

paid to just sit there. They're in

danger. Uh, you know, let's not minimize the humanitarian aspect of the crew, which doesn't have access to stores, to fresh water, to food, and, you know, just the danger of not knowing whether

you're going to be attacked by a drone or ballistic missile. But in the larger scheme of things, what's happening is most of these companies are more than making enough to compensate for those

losses by the premiums they're getting in other bases. So um you know some companies are lucky to have no ships

inside that's ideal but by and large the companies uh I should also say who who tend to carry these volumes you know there's there's kind of a corridor an

energy corridor going straight from the Middle East to the far east and so not all of these voyages are spot market voyages they are kind of like a shuttle

bus which just goes back and forth every hour on the hour uh as liner services do you know just very regular. So those are disrupted but it's not quite the same

market effects. Whereas the vessels

market effects. Whereas the vessels which trade on the spot market those are the ones earning the premiums. And this the spot market is something you conducted now a a contract is you

book a certain rate at a in a at a future. So ideally a company would have

future. So ideally a company would have zero futures market or contract exposure and they'd be all in the spot market because rates have gone up so much. Now

I um you know as an investor somewhat disappointed to learn that actually the drill ships so drilling oil a lot of that is contracted out in the future. So

they didn't capture a lot of the up move in in pricing over the past three years.

Um in terms of tankers actually transporting oil as well as transforming uh refined products as well as transforming chemical products. How much

exposure do they have to the spot market and how much can these companies capture the extremely high prices that are in the market right now?

So as a general rule you could maybe separate things into the gases and then the liquids. And when it comes to the

the liquids. And when it comes to the liquids by and large the public companies which investors have access to are very spot market oriented. When it

comes to gas markets, whether that's liquid petroleum gas, so that could be like propane or butane, those there is part of it which is the spot market, which is a very exciting, very volatile

spot market. And then there's part of it

spot market. And then there's part of it which is um long-term contracts. So that

could be one year, it could be longer.

And then when you have liquid natural gas that is very much more like an infrastructure uh play in the sense that you have 10-year charters, 12-year charters because the ships are so

expensive, you know, this is an important part of the context. These LG

carriers are hundreds of millions of dollars. And so in order to get the

dollars. And so in order to get the backing from a bank to order them, you know, people aren't just getting coins out of their couch to order these vessels. they have to be built against

vessels. they have to be built against guaranteed contracts whether it's with Qatar or whether it's with Kuwait or major producers so they have visibility

on those future carbons. So to make a long story short, uh the most exposure to spot I would say are very large gas carriers which normally are loading a

lot of cargos in the Middle East. And

then you have oil tankers of all kinds, all sizes uh from small to large from petroleum products to crude tankers.

Most of the publicly traded companies want that spot market exposure and they do that on purpose. uh some try to protect the downside a little bit with some longerterm contracts, but by and

large they know that as public companies, investors want to be able to capture that volatility. And you there are companies that have tried to do nothing but long-term charters. And

what's really interesting to notice is that in bull markets, they actually don't seem to benefit. In other words, investors don't bid up the shares. But

you would think that in the contrary when in weak markets they should be protected and rewarded for that risk management but in fact they sell off with everybody else. So it's all

downside no upside if you are uh on long-term contracts by and large in terms of publicly traded shipping companies. So that really incentivizes

companies. So that really incentivizes the companies to keep that spot exposure.

You meticulously track shipping rates around the world. uh you know I'm a follower luckily of your private Twitter and you're you're posting all of these rates as they appear as you as you hear

about them from from your sources from your data uh that of course and on your Substack where have prices gone up the most and why I would say the most extreme moves have

been in the US Gulf uh product exports these are small vessels relatively speaking these are vessels which normally do not enjoy the most

extreme volatility for the simple reason that on a dollar per ton basis the smaller a vessel you use the more expensive it is. So what happens is if you're using a small vessel and it gets

very expensive uh someone who wants to ship a cargo will just upsize the cargo so they can take advantage of those econ economies of scale. So there's kind of a

trickle up effect in freight which happens in every sector and therefore the very large crude carriers or in the case of products LR2s they capture the

biggest upside. So for example when

biggest upside. So for example when Europe banned Russian petroleum products and there was this huge panic at the end of I think it was 2023 uh the vessel class that did the mo the

best was the large product carriers.

This time what's really strange is we have the smallest vessels making the most money. I've also seen this in

most money. I've also seen this in handyiz vessels in the Mediterranean. So

these are voyages which can you know they can be quite short going from say North Africa to the Mediterranean uh basin. So might be Italy or France and

basin. So might be Italy or France and in four or five days these vessels can be making $300,000 a day and their expenses are closer to say $8,000 a day.

So, and what were the what sorry what what was the it's $300,000 a day now. What

was the pricing two months ago or two years ago in it would have been closer to 30,000 a day two months ago and that would have 10x yes and that already would have been

very profitable at $30,000. So, it's

just I would say that it's the VLCC's just before the this war started were already at multi-year highs if not all-time highs in the spot market. There

was an immediate panic effect where the first vessels to be booked to go to Yamu on the Saudi west coast were booked at the most insane levels, but it was only a few vessels that got those rates. What

I find really remarkable about what's happening in the US Gulf is uh this has been going on for a month and we're still basically at all-time highs at about $100,000 per day, sometimes more.

These are voyages either going from Texas to the Caribbean or from Louisiana to Europe or it might be through the Panama Canal and as far as Japan. You

know, now the Jones Act has received a temporary waiver which means that product can also be taken to Alaska or to New York. There's just crazy pool

because the US is really the only place which can provide extra barrels and is prepared to do it. Normally these

barrels would be coming from Asia, from Singapore, from South Korea, from China.

I mean, China could very well uh draw down some of its tremendous petroleum reserve and start inching up refinery capacity and uh you know really

become a release valve, but they're choosing not to do that. So uh I guess that they are protecting their own interests in the sense that they don't know how long this will last and they probably figure that they might, you

know, looking at from their perspective.

I don't want to just assume that they're acting in bad faith and want to pinch everybody else around them, but uh you know they they are apparently from a diplomatic perspective exporting a few

cargos to some neighbors like Laos and Vietnam who are really desperate. But

normally seeing an MR tanker, this you know smaller product tanker carry let's say diesel or jet fuel or even gasoline from the US Gulf through the Panama

Canal to Japan uh to you know the Far East. That's that's really really

East. That's that's really really bizarre. I mean this is not something

bizarre. I mean this is not something which is supposed to happen.

I'll explain a few terms. So you mentioned uh Yanbu that is the port on the west side of Saudi Arabia. Most of

the time Saudi Arabia does its exports through the east side of Saudi Arabia, then it goes through the straight of Hormuz. They've switched things around.

Hormuz. They've switched things around.

So I think they're now, you know, I'm I'm not going to have the right number, but around 6 million barrels per day.

So, you know, over half of their production they've been able to export now via the pipeline on the west side through Yan Yamboo instead of the east

side. You said VLCC's, that's very large

side. You said VLCC's, that's very large crude containers. And then you also

crude containers. And then you also talked about ships. I think you said smaller product ships. So, not crude oil, but products like uh kerosene, jet

fuel, gasoline, going from $30,000 a day to $300,000 a day. But then you said VCC's are so, you know, in a hot market as well. So I understand that

as well. So I understand that everything's in a hot market, but I thought you said that the hottest market was the small refined product ships and then so then tell us about what you know

so what went on with those rates and then what what went on with VLCC's you know which is a better market uh and why. I'm glad you raised this question

why. I'm glad you raised this question because it's not an easy one to answer.

But to make a long story short, just before the war happened, the large crude tankers, so the VCC's, the next one down

is called SWMAX. It's a 1 million barrel capacity crude carrier, which is the largest, which can go through the SW canal fully loaded, which is called why

it's called Suez Max. And then you had the Aframax which is the next one down which can carry 750,000 barrels approximately.

So that was the hot market and there was a lot of reasons why it was so hot but one of the main reasons is because the last time we had a really hot market was over 20 years ago. People

bought too ordered too many vessels and now we're kind of still working off that overhang. but also because there's been

overhang. but also because there's been this very mysterious market participant uh a Korean billionaire who is the son

of uh a shipping I guess you could say uh conglomerate who is involved in all different shipping sectors called Sinaore

and they have increasingly gained exposure to the largest the VCC market. So little by little, and this

market. So little by little, and this has been going on for years, but most people weren't aware of it. But I was tracking this and I was in touch with people who were explaining to me that

this guy had a theory that Iran was going to be attacked by Israel. You

know, he he was like a visionary. He saw

all this happening two years ago and, you know, I heard these theories and I said, well, you know, it could happen for sure, but that's a pretty low probability

event and I wouldn't want to make a bet on that. But this guy has been slowly

on that. But this guy has been slowly and quietly accumulating these VLCC carriers.

And then over Christmas holiday just three months ago, he approached basically every single large owner of this class of ship. And there's only 900

of them in the world.

And he made an offer to them about 20% above the par value at that time. So an

offer that was very difficult to refuse and a lot of owners accepted and sold even multiple ships. Some sold in six ships, eight ships and then you know

things were quiet because it was over Christmas so the brokers weren't at their desks and you know no one really realized what was happening and then one day everyone wakes up in January and

this guy's bought like 50 more ships.

It's it was an incredible move and the beginning of the market in January started off a little bit slow and then when people started realizing that there was this one company who had basically

overnight become the second largest controller of these ships in the world.

He also chartered some in so actually he is the largest.

He started pressuring rates higher. He

started saying, "If you don't pay me any something above this level, I'm just not going to take your cargo."

And so then what happened? Everyone else

took the cargos and there was nobody left. So he was essentially cornering

left. So he was essentially cornering the market. So there was this once in a

the market. So there was this once in a generation dynamic happening in addition to the fleet that was already old and

then the war hits on top of that. So,

the reason why the stocks were all at 52- week highs when the war hit was because of this dynamic that I just described. So, in theory, if the war

described. So, in theory, if the war stops tomorrow, we should go back to that market. There's no reason why, you

that market. There's no reason why, you know, nothing else has changed except maybe, you know, crude supply, the Iraqi barrels will take some time to get back online, but a lot of barrels in the

Middle East will be able to travel. And

in theory that would be the category of stock to own the ones I just described.

So that would be companies like Frontline ticker FRO DHT which is a VCC pure play. In theory all these companies

pure play. In theory all these companies are going to benefit from Sinaore a private player uh essentially making the market.

Now when the war hit all of a sudden the vessel class that was the least exciting in tankers the MRS became the most exciting MRS middle range medium range

yeah medium range these are vessels which are meant to be doing relatively short hall voyages so local voyages let's say a typical voyage might be from

the US Gulf to either Mexico or the Caribbean or to Brazil they also go to Europe but that was already considered one of the longer voyages, but seeing them go all the way to Asia is crazy. I

mean that's why why do they normally do short range and not longer range like like Gulf to Asia?

It's a question of economies of scale. I

mean, you have larger uh tankers called LR's long range which are built to do longer voyages. You would tend to want

longer voyages. You would tend to want to uh aggregate caros together. There's

nothing which prevents MRS from doing longer voyages. It's just that that has

longer voyages. It's just that that has traditionally been the way the market was organized. The larger vessels did

was organized. The larger vessels did the longer voyages. Yeah. Economies of

scale. So, in other words, it doesn't really matter. you know, they they can

really matter. you know, they they can certainly do it, but it's just squeezing the market because if you have demand from your neighbors, let's say, in the

Caribbean, and you have demand from Chile and from Peru and from Mexico and from Canada and from Europe, and then on

top of that, you have demand from Japan and from Australia and from Alaska and all these weird destinations, which was not the case five weeks ago.

it just really squeezes that supply. So

that's making it really exciting. And uh

essentially what we're seeing today in the market and I, you know, I have no reason to think it won't continue. The

prices of these products in Asia are going to all-time record highs. Whether

it's diesel produced in Singapore or gas, oil, and jet produced in Korea, the prices are so high that it's actually even with tankers at all-time highs,

it's cheaper to make it in Texas and send it all the way across the world than it is to make it in Asia. And

that's what we call an arbitrage. So,

and essentially you can lock in a guaranteed profit because the product itself is still much cheaper in Texas and also more plentiful, more available.

And you pay the middleman, the tanker owner, who's going to ship it all halfway across the world and you still make money doing that. So, you know, as we're speaking,

uh, spreads and cracks and everything are on fire because I think there was an expectation that in Trump's speech last night, he was going to announce an end

to hostilities or maybe a more specific timeline or maybe an agreement or some kind of negotiation, whereas there really was no information and

the price of crude oil just ripped higher on that on that realization. I think the entire market

realization. I think the entire market suddenly we shocked into the realization that this isn't going to end and resolution is not in fact on the horizon

and that means that these Asian economies need to plan ahead. You know,

it means they're not going to be able to ramp up their refinery utilization anytime soon and therefore they have to book cargos from the US gold. I mean

there's there are very few other sources of this extra product. Even Europe is sending extra barrels to to to um to West Africa and to Asia now which is

again not something which was happening.

So it's wildly profitable to buy oil in the west. Uh so mostly Texas let's say

the west. Uh so mostly Texas let's say and refine it and sell it to Asia.

That's just a wildly profitable trade.

And if a I imagine a lot of firms doing this are the trading houses like VTOL Trafigura. Obviously the oil companies

Trafigura. Obviously the oil companies have their own trading houses that can be smaller and they're paying the shippers this which is the sector we're talking about and the shipping companies are able to you know extract an arm and

a leg but it's still wildly profitable.

There's a lot of money to go around.

Yes, everyone is making money and it's also affecting asset values because as soon as you can you have a little bit of visibility on exceptional cash flows

even for three months then this really interesting dynamic happens which is one of the key things to understand for any shipping investor. So you have the spot

shipping investor. So you have the spot market and you have these violent moves but they don't last very long. So you

wouldn't want to let's say put a multiple on those earnings. I mean some analysts do but it's like a joke among shipping investors because who knows what the earnings are going to be next

year. However, where things come in to

year. However, where things come in to to become really interesting is that if you know that a voyage is exceptionally expensive today and that voyage lasts

let's say two months or three months then you can actually lock in by chartering in in other words taking control of a vessel for the next year

at a very high rate but you can derisk it immediately by the expensive first voyage. So you

were talking about Trafagora or VTOL or some of these traders in Mercuria. So

what they'll do is I'll I'll put real numbers on this.

Yeah. Yeah.

Let's say you have an MR tanker which under normal circumstances if it's making $25,000 a day is very profitable.

Expenses are more like 10. That's your

baseline. Now imagine we have this situation. Let's imagine that you can do

situation. Let's imagine that you can do a 45day voyage at $120,000 per day. So

that's a month and a half at an absurd rate.

It So you would have to do the calculation to figure this out. And you

know, people literally spend all day with spreadsheets figuring this out. But

you would say, okay, 45 days times $120,000 per day. That's my hurdle.

Now, what if I could charter in an MR at 40 $40,000 per day for a year? What do I do? I chartered in. So 40,000* 365.

do? I chartered in. So 40,000* 365.

then my first voyage is 120,000* 45 as I subtract that and then my hurdle for making money on the remainder of that charter is much much lower. I've derised

it immediately and this is exactly the kind of calculation which Sonicore has been doing. They've been acquiring

been doing. They've been acquiring vessels but also chartering in vessels during that Christmas mayhem that I was alluding to earlier. you know, they weren't just buying vessels. They were

chartering in these VLCC's at rates which seemed really high, but spot rates went so high immediately afterwards that on the first voyage, that whole uh

commitment for a year, it was derised.

So that means that charters are going higher. What happens when charters go

higher. What happens when charters go higher? That's guaranteed cash flow.

higher? That's guaranteed cash flow.

That's something you could actually put a multiple on. Let's imagine that you book a voyage like a couple of companies just did for five years.

5 years, 365 days a year.

The owners are not paying for fuel, which is the most expensive part of a voyage. It can be millions of dollars

voyage. It can be millions of dollars per voyage. So, they're saving money on

per voyage. So, they're saving money on the fuel. Uh they are, you know, making

the fuel. Uh they are, you know, making money handover fist for 5 years. So,

then you can put a multiple on that vessel, which is much higher. And then

you apply that multiple to the rest of the fleet. And then all of a sudden the

the fleet. And then all of a sudden the valuations that we had 3 months ago, which were already high at the time, they don't look so high anymore. And all

of a sudden, people are yoloing in to buy vessels, you know, $40 million more uh on a on a vessel that was worth 100 million two months ago. So there are these knock-on effects. You have the

spot market, the charter market, the asset values, the equities, and then of course you have even more knock on effects, which is when it comes to the banks, you know, the banks really

want to lend to shipping companies right now because they're making so much money because they have reduced their their debt. And so then that allows you to

debt. And so then that allows you to have collateral which is worth a lot more, which means you can borrow more and order new ships. And it's like this vicious cycle where we are just

predestined to order too many ships to have a bust and then do it all over again in 15 years.

So you get that virtuous cycle of analysts can now have a greater certainty greater visibility into future cash flows because the the one-year spot

rate has gone up because there's visibility about a twomonth uh trip. So

if there's you know three types of ships in terms of um uh uh you know chemicals refined products and then the crude oil and like let's say there's seven sizes.

So there's theoretically 21 types of ships but I know that some of the ships don't exist. Let's say there's I don't

don't exist. Let's say there's I don't know like seven or eight or 10 whatever types of ships. What are the best ships that you want to own right now if you were a ship owner? And what are the the quoteunquote worst ships that probably

you're still making a lot of money but it's the least profitable.

So that's easy. As long as this disruption remains in place, you want to I'll I'll be even more specific than ships. I'll say where you want to own

ships. I'll say where you want to own ships in which basin and the kind of ship because that's you know we've become so uh segmented now and so kind

of surgical in what's good and what's bad. So you want to own an MR tanker in

bad. So you want to own an MR tanker in the US Gulf. That is like the gold mine right now. It's such a gold mine that

right now. It's such a gold mine that you can take a cargo basically anywhere in the world and sail back empty and you will still make money as long as this

crisis is happening. The other asset class which is doing really well is medium-sized crude tankers. And the

reason is simple. It's because from the Middle Eastern Gulf, usually it's the largest crude carriers which do this kind of shuttle route I was alluding to earlier between the Middle East and the Far East, primarily China, but not

exclusively. Japan, Korea, Thailand,

exclusively. Japan, Korea, Thailand, Vietnam Taiwan.

So, people are scrambling to replace those barrels. And they're not coming

those barrels. And they're not coming from the Middle East. Where are they coming from? They're coming from the

coming from? They're coming from the West, West Africa, the US Gulf, uh the North Sea, Mexico, Colombia, Venezuela.

Most of those cargos are coming on Swiss Maxes or Aphroaxes. So, that's what you want to own. There's a company TK Tankers which only owns medium-sized pre-tankers. They are cleaning up. They

pre-tankers. They are cleaning up. They

just happen to be one of the cheaper companies. You know, they have 30% of

companies. You know, they have 30% of their net asset value in cash because they've just been hoarding cash, which a lot of people have criticized them criticized them for. It's a little bit weird to have a shipping company with,

you know, negative leverage, but it's certainly derisked. You can say that

certainly derisked. You can say that much. And they're doing very well. So

much. And they're doing very well. So

either the small product tinkers or the medium-siz crew tankers. Now the worst so to speak is uh the VLCC class because

there are simply no cargos and so therefore the danger is that you know some of them will carry cargos from Texas or from uh you know a long call

Brazil also all the way to China. But

eventually all these ships that are waiting outside the Middle East and have nothing to do, they're going to start getting worried and they're all going to go west and they're going to be too many

vessels and not enough placement cargos.

So that's the danger. You know, if this, let's say, persists for the next two, four, six, eight weeks, that market's going to crash. And we're already kind

of seeing signs of it. There are maps of these large crew carriers which are ballasting under the Cape of Good Cape of Good Hope over you know in Africa.

You can just see them kind of you know heading over there. It's like I watching a car crash in slow motion. So that's

the danger. You know if we have normalization those those vessels are going to go back to being the most profitable. Uh so that's going to be

profitable. Uh so that's going to be exciting but for the moment they are handicapped. Now the other vessel class

handicapped. Now the other vessel class which is going to be problematic is the LR2 and the LR2 is the largest product carrier which normally would be doing

very well because they would be picking up all these cargos in Saudi Arabia and in Kuwait and that is like 75% of their

trade. So with 75% of their trade

trade. So with 75% of their trade essentially paralyzed they are kind of stuck in the middle. you know, they don't have uh the flexibility of an MR,

which is a smaller tanker. It can go into a lot more smaller ports, which, you know, can can accommodate smaller vessels. Their main stay of their trade

vessels. Their main stay of their trade is gone. So, they're kind of stuck in

is gone. So, they're kind of stuck in between. So, that's very dangerous

between. So, that's very dangerous and therefore at the moment that's not really the vessel class to own. So the

market that was the tightest going into this war was the VLCC's very large crude carriers cargos because there was kind of a squeeze on that market and the

Korean gentleman you mentioned had bought up all these ships and obviously it was it was a very hot market and so so that that guy you said made a prediction that Israel and the US would

would strike Iran and see see some um some fireworks unfortunately um and he he turned out to be correct. I also want to say that another person who had been thinking very hardly about the closure

of the straight of Hormuz is is you almost exactly two years ago you wrote about what a disruption would mean for crude tankers in the Middle East. And

it's from this piece um on your Mr. Ventures and shipping substack that I learned that the VLCC market is mostly a lot of it is is from the Middle East

because that's where the the true gushing of oil comes from. Like tons of places in Africa and the Brazil and the North Sea produce a lot of oil. But in

terms of I mean I didn't know you said a million barrels, that's a lot. Like

that's more than the daily production of most countries by far. Um, so, so the VLCC market has been helped the least by this conflict. And it sounds like

this conflict. And it sounds like they've been, uh, hurt not because so many of the ships are trapped in the straight of Hormuz. A lot of them are, but, um, you know, I I I learned in in preparing for this that a lot of those

tend to be owned by stateowned companies like Chinese companies. So, not publicly traded stocks that that we're going to be talking about. Um, but that they're kind of twiddling their thumbs outside of the straight moves because they have nothing to do.

Yeah, that's exactly right. I think you you hit upon something which is really key to this whole market and I think it's worth taking a moment to kind of reflect on that.

Most people consider energy shipping to be uh energy names. In other words, sometimes they trade in markets as if they were like let's say oil goes up and then tankers will go up. Like so it

doesn't always happen, but I think that there's a little bit of a an let's say an assumption made that what's good for oil producing companies or drillers or

something else is good for tankers or vice versa. What's bad for them is bad

vice versa. What's bad for them is bad for tankers. And I think it's it's a

for tankers. And I think it's it's a nuanced point of view, but it's you actually you can't make that direct link. In other words, there are freight

link. In other words, there are freight specific elements, which means that essentially, if you know what the price of oil is doing, it tells you absolutely nothing about what's happening in

freight markets. You have to know what

freight markets. You have to know what the regional disparities are to know if a shipper can make money off that arbitrage, let's say, that we were

talking about earlier. But also, what really matters is cargo supply. So, uh,

as you said, you know, Saudi Arabia, Oman, Kuwait, uh, Iraq in particular is a huge producer with a lot of VCC

cargos. And the fact that those barrels

cargos. And the fact that those barrels are offline means there's just not enough for these VCC's to carry. And

that is a huge problem. I mean,

something like 2/3 of the fixtures normally would happen between the Middle East and the Far East. And so, you know, we're left scrambling for work.

Basically, it's a little bit as if you had, let's say, a city where a lot of the taxi drivers made a lot of the money on their airport run and then all of a sudden, you know, the airport stopped

working. What would these taxi drivers

working. What would these taxi drivers do? Well, they would flood to the city

do? Well, they would flood to the city and they would probably be doing much shorter trips, but there would be too many of them. All the guys who had depended on that airport to city run

would suddenly be available. And I know be the opposite of Uber surge pricing where there would just be more drivers and the price would automatically be adjusted. So that's what we're in danger

adjusted. So that's what we're in danger of seeing in terms of fallout from this disruption when it comes to the shipping markets.

Right. And again, so in that piece you wrote two years ago uh which we can we can link to, you said that imagine there is a hot war disrupting crude oil exports through Hormuz. The Far East would scramble to source alternative

crude oils from the US Gulf, Latin America, West Africa, Mediterranean, North Sea. There would not be nearly

North Sea. There would not be nearly enough to compensate the loss of Middle Eastern barrels. Inventories would

Eastern barrels. Inventories would aggressively be drawn down in places like China. Demand for Russian oil would

like China. Demand for Russian oil would skyrocket overnight. So all, you know,

skyrocket overnight. So all, you know, all all four of those predictions have uh happened. The US would release

uh happened. The US would release barrels from its strategic petroleum reserve. It would not be enough. Europe

reserve. It would not be enough. Europe

might be forced to abandon its ban on Russian crude imports. I know that the US has uh has abandoned it. I don't know actually if the Europe has but basically all those predictions have come true.

The what and you also predicted that the real uh the real demand could rise significantly would be for the Suez Maxes and the Afroaxes. So smaller ships than the VCC's and that midsize crew

tankers would be needed to load the additional throughput. and you predicted

additional throughput. and you predicted that it would be you know that that the stocks would do well but that they they might sell off uh a little bit into the crisis which is exactly what happened.

So basically all you know seven or eight of those predictions that you made two years ago uh have happened. I believe

the one thing that you uh were were exploring a potential of that has not happened is that you said VCC rates would plummet because of this dynamic we've happened.

What has happened to VCC rates? And are

you still worried about this risk that VCC rates could plummet because these uh you know very large crude container cargo ships are kind of twiddling their thumbs.

Yeah, I'm really glad you highlighted that. Uh I was starting to get really

that. Uh I was starting to get really smugged listening to all the things I predicted. So it's good to, you know, to

predicted. So it's good to, you know, to be reminded of something which I didn't.

But yeah, I think really what made this a little bit different than what I was expecting is the fact that the market just happened to explode higher just

before and so therefore when Saudi Arabia interestingly chartered in a certain number of VCC's the night before the war started. So

whether they had Intel, you know, it's a this is, you know, a state uh connected organization, Aramco, Bakri, they're, you know, they

they they took on extra exposure at a very high price, six figures per day.

And it turns out it was cheap because they were right. Uh but they chartered tremendous number of ships to go to that western port.

And you know to their credit they have managed to ramp up capacity on that pipeline and that has supported the market. So in other words it was already

market. So in other words it was already such a strong market that even though rates have essentially come down from those levels now. So we are lower than

they were but they're still great.

I think that that's taken a lot of people by surprise. I think that they expected vessels to go west faster and to create a glut. But I think that

ironically what's kept the VCC market afloat is so many owners are just they keep saying to themselves this can't go on. So they wait outside the Persian

on. So they wait outside the Persian Gulf without cargo with no hopes of getting a job just saying to themselves this is going to this can only last

another couple of days. This look at the price of oil. This is crazy. They're

going to do something. They'll find a way. It comes back to this thing which a

way. It comes back to this thing which a lot of people are talking about which is that the straight of four moves is too big to fail. You know, it's something which has been repeated quite a bit lately and it's true. No one expected

this exact scenario and I think it it actually made it easier for me to game this out because it was complete science fiction to me. I had absolutely no

expectation of this actually happening.

So when it comes to VCC's now it's just a matter of how long it's going to take before all those owners who are twiddling their thumbs as you say decide to go to where the work is which is in

the west. The other thing which is a

the west. The other thing which is a little bit dangerous is that if these Far Eastern refineries really throttle down their utilization, then they're not going to need as much

crude feed stock in a month or two. And

they're not going to fix cargos to becoming, you know, because to get to the west or the east is like a minimum of 50 days. You got to fix the ship usually a few weeks in advance. So this

is like a twomonth delay and no one knows what the world is going to be like in two months. So, do you draw down inventories if you're China? You

probably do. You know, on the margin, do you do you order that extra cargo? Do

you fix it? Some will, some won't.

Depends on their risk tolerance. It's uh

it's very tricky to game out. So I think the expectation now among free analysts is we're going to see a little bit of weakness but then there's this uh there's this unexpected

element of coming back to Sinapore who has now some people are exaggerating saying he he's trying to corner the market. It's not that he's trying to

market. It's not that he's trying to corner the market but he has a position of strength and he has demonstrated that he's willing to use it by not chasing

cargos. So that is something which was

cargos. So that is something which was not quite true yet. I mean two years ago he might have maybe he controlled 30 ships, 25 ships. Now he controls more

like 150 ships.

So that wow on its own is something no one could have predicted except him.

So that's like 20% of the BLCC market.

Yeah. And if you just take the ships which are the most attractive and the most likely to be chartered by national oil companies or international oil companies, it's actually a much higher

percentage. It's probably 30 35 perhaps

percentage. It's probably 30 35 perhaps higher. They're also very secretive. So

higher. They're also very secretive. So

they're continuing to buy vessels.

They're not telling anybody. Sometimes

we find out about more. Sometimes we

don't know. The data providers who are normally quite accurate don't have up-to-date information because they're not sharing it. So, it's really like a stealth campaign. It's super

stealth campaign. It's super interesting.

So, I I'd love us now to go through a piece you wrote, you know, in in later in in March last month about it's called

Atlantic uh middle- range bonanza, who benefits most. So talking about the

benefits most. So talking about the stocks publicly traded securities of shipping companies in the in the tanker sector and which are how have the most advantages ultimately I want you to tell

us the answer what what are the companies that you think are poised to to do the best in this environment but take us through the journey that you went on in answering that question the thing is that there was this very

strange thing happening soon after the war started there are usually we refer to them as the Atlantic basin and the in the west so that's kind let's say the western hemisphere as we

know it so Latin America North America but also Europe and the Mediterranean and West Africa that's the Atlantic basin and then you have east of SW is the Pacific basin and normally what

happens is in most asset classes you'll have a healthy balance of ships in each part of the world and then if earnings are better in one then uh subsequently

ships will kind of move over there correct that balance and you know dissipate and then that'll leave a you know it's just kind of this continuous back and forth and so therefore it tends

to be quite smooth and gradually move you know for a few months it'll be this one and then we'll come back down and and also remember these vessels are carrying caros from one basin to the other so if the earnings are better in

one they might just carry the cargo and they just stay over here so that tends to be quite predictable but what was happening when the war started is all of

a sudden Asia panicked and They wanted to take caros, as I was saying, from the west. And so the earning spread became

west. And so the earning spread became like unlike anything I've ever seen before. Normally the spread might be

before. Normally the spread might be $5,000 a day. Sometimes when it's 10, that's like considered extreme. So you

might have like in the west a tanker might be making 30,000. In the east, it might be 20,000. That would be like a normal spread. Already notable spread.

normal spread. Already notable spread.

We were seeing in the Pacific MRS making 20 25,000 and in the Atlantic making 75,000. So, you know, I was already

75,000. So, you know, I was already graphing this and tracking it and tweeting it privately to my subscribers saying like, "This is crazy.

Why is this continuing this long? It's

bizarre. I don't understand how how much longer can this last?" It turns out it's continuing to last. And most investors said to themselves, "Well, that will correct because people from the Pacific will, you know, eventually make it

over."

over." But actually the opposite happened.

Actually the the the east became higher because they were trying to attract vessels to come over there. So once I determined that that trend was happening, I said to myself, I want to

own the companies who have the most vessels loading in the US Gulf. It's not

going to be all them. I know that for a fact. I've tracked fleets before. You

fact. I've tracked fleets before. You

know, I've set it all up on my AIS software. I have a couple of different

software. I have a couple of different softwares in my so I can just, you know, at the click of a button I can see where the fleet is, but it's not enough to see where the fleet is today. You have to know where it loaded the cargo because

that's what determines how much it's making. So then I started going through

making. So then I started going through the fleets literally vessel by vessel.

So some of these fleets have 60 MRS. So I was examining the last few voyages for every 60 middle ships. 60 middle ships.

Yes. That would be like Scorpio tankers, ticker STNG, Torm ticker TRMD, Hafnea, ticker HFN.

Those three are the the big MR owners.

You also have a company which uh some people like to refer to as the tanker ETF because they have both product and crude and they own the big sizes and the small sizes and that's international sea

weights which is one of the few truly American shipping companies in the sense that management the offices are in the US management is by and large American and so I was going through these

companies one by one and Torm uh is a company I've been a shareholder in for many They tend to be the strongest commercially. Uh management's just very

commercially. Uh management's just very clever. They're also generous with their

clever. They're also generous with their shareholder returns. They have a very

shareholder returns. They have a very high payout ratio. There's just they have a lot of things going for it. So,

I'm in touch with that company regularly. I really believe in them. I

regularly. I really believe in them. I

think they're best-in-class essentially for the product tinker market. So, I was not that surprised to discover in my research that their MR fleet was heavily weighted to the west about 70% which is

really quite imbalanced. But to me the big surprise was to see International Seaways this tanker ETF stock uh which has to be fair done quite well in the performance of its MR fleet which is 29

vessels and I interviewed them to learn more and shared part of that with the subscribers and you know it really gave me a lot of insight into why they're doing so well.

It's because they delicate their MR pools to two pools which is a kind of a a provider which aggregates hundreds of vessels and charters them for seawigs.

So they have one called Nordon which is a Danish company with offices all over the place but they have another one which is based in Chile in Florida a big shipping company. So they do a lot of

shipping company. So they do a lot of Latin American work and if you look at slot rates to carry products to Latin America in the last month they have been

unbelievable like over $100,000 per day consistently.

So you know seeing ISW's ships this is Seaways constantly going from the US Gulf to Latin America and back again gave me the confidence to know that well

first of all I can model their earnings higher. So what happens typically an

higher. So what happens typically an analyst will take let's say benchmark rates and they'll say which are kind of averages and then they will extract

those and extrapolate to what earnings will be based on that knowledge and they'll do it the same extrapolation for every owner.

But if you know for a fact that actually 70% of the fleet is benefiting from this basin with earnings which are let's say

on average 70 80 $90,000 per day. Uh

it's not an average. You know you can you can project that into your earnings.

You can expect an earnings beat. You can

anticipate that if there's any weakness in the stocks. you can anticipate what's going to eventually lead to not just an earnings beat, but leading up to the earnings beat, the analysts will update

their estimates because they'll in the process they'll figure it out. They'll

upgrade the stocks, but by the time that happens, it's too late to buy.

So, I was essentially front running that whole process because I'm so used to knowing how this works that I'm trying to get ahead of the game by tracking the vessels individually, seeing who

benefits from that good positioning most. And even without modeling it, you

most. And even without modeling it, you you would be able to be confident in knowing that they would be beating estimates for that asset class, which is a big chunk of their earnings. So, what

you're looking for of ships that are making the most money right now, it's not just the type, whether they're product companies or or crude ships.

It's not just the size, whether they're very large or they're Afroax, Suezmax, whatever. It's also where are those

whatever. It's also where are those ships right now? And you're saying the most profitable ship to be right now is one that is in the West that can pick up oil or refined products and ship it to

Southeast Asia where it is most desperately needed. either a company a

desperately needed. either a company a ship that can do that right now or a ship that's already on the way I could and could lock in those economics. So,

is is that the only reason that you uh like international that that company you mentioned or is it about the fleet because because you you said they do they're an ETF so they do have the very

large crude carriers that are the least profitable right now, right?

Yeah. Or the one the most at risk you could say to put it differently. But the

thing with all these companies is obviously there's a range of governance.

There's a range of shareholder returns of balance sheets of my confidence in management's ability to make the right call in terms of when to devest assets when to buy new assets what they're

going to do with this mountain of cash which is going to be coming around on the horizon. Are they going to share it

the horizon. Are they going to share it with shareholders or not? Uh do I trust them? That kind of thing. So that's

them? That kind of thing. So that's

where basically that's the reason why I have the Substack is because it's an ongoing conversation and because the perception of a company can change over time. You know sometimes like for

time. You know sometimes like for example there's a company which did really really well in 2022 and was spending mountains of cash on buybacks and that was amazing and then the

management got very nervous about the uncertainty in the world and essentially suspended all shareholder returns except for like a nominal dividend and since then they have not reinstated buybacks

even though the shares were trading at like half of net asset value. So

which company is this? This was Scorpio Tankers which has one of the youngest fleets and you know they do very well. I

mean I follow their fixtures on a daily basis. There's some very smart people

basis. There's some very smart people working there who I interact with regularly. Um so it's just that you know

regularly. Um so it's just that you know my opinion of them changed based on that change in their decision-m process based on the fact that I was expecting if not

a larger dividend than at least the buybacks especially when the shares were trading at a discount. But when they didn't do that then over time my attention shifted to other companies

which were and you know this is an investor's market in the sense that when it comes to most of these segments you have multiple options to choose from. So

you know you can look at it as like an ETF or like a a basket approach where you own all five let's say of the product tinker companies and you weight them differently. So maybe you would do

them differently. So maybe you would do 20% each, but then when you realize that Torm and Seaways have more vessels in the west, maybe you would bump that exposure to 25 and reduce exposure to

some of the others. But this is all part of the decision-m process of being informed, knowing what's happening, and basically avoiding that moment of getting blindsided where, you know, earnings hit and they're nowhere near as

good as you expected even though the market was on fire and then you dig in and you realize why. Or sometimes you never even realize why. Sometimes it's

just like a black box and you're left wondering why this big earnings miss and then you feel stupid for having an allocation to that company as opposed to the other ones. So it's about anticipating those subtleties. Another

thing which is important is I know that you know among my subscribers and and clients on a one-to-one basis I have hedge funds and I have pot shops and I have people who will take the

information that I'm that I'm you know sharing and they'll have an even more sophisticated way of using that to make money that maybe I couldn't come up with or anticipate but that doesn't matter

because they don't need me to, you know, chew their food and swallow it for them.

They just need the food. So I think that's one of the the coolest things about this process is I have anything from retail investors who you know are serious enough about chipping to want to

invest in the knowledge you need to be well informed to people who are probably devising sophisticated strategies maybe

trading intraday going long short uh doing earnings plays I think all that's fantastic all of it helps the market become more efficient so international seaways has I know this

from your 29 MR ships. You've tracked

every single one of them. You also made a map of where those ships are. The fact

that when you wrote that article, the ships were focused on the Western Hemisphere is what made you like that company a lot and think it was it was well positioned. You also did that

well positioned. You also did that analysis for three other companies. Tell

you mentioned Torm already, but tell us the other companies that you did the work of tracking up where the ships are and then how you ranked that in terms of I like the positioning of where they are

in the world versus not so much.

Yeah, the one that really surprised me was uh Armore, which is a company I like because it tends to be uh very predictable in its way of managing cash

flows but also the fleet. and they have both chemical tankers and also these MR tankers. So, they're kind of like an MR

tankers. So, they're kind of like an MR tanker pure play. But it turns out that based on my research, they were more balanced. So, they were more 50/50,

balanced. So, they were more 50/50, which is actually what I expected most companies to be. I was quite surprised to see them the work that they're doing among, you know, both basins in particular because they they tend to

have a quite strong presence in the Atlantic. So part of that might be the

Atlantic. So part of that might be the fact that some of their smaller tankers have special coatings so they can carry things like vegetable oils or more

delicate cargos which are specialist cargos and that might carry a premium.

So we'll see when their earnings come out you know whether that that turns out to be the case and whether they have compensated based on let's say getting premiums on special cargos even though half their vessels are in the east. But

to me I've I've been a proponent of of Ardmore for years now. I've owned it off on and off since 2019. It was one of my biggest winners in the kind of tripling which happened in 2022. So I have, you

know, good residual feelings for the company based on that. There have been some changes in management and the new CEO is a chartering guy. So he's very sensitive to these commercial questions and he's a good communicator. So you

know, I enjoy exchanging thoughts with him. But just based on the positioning,

him. But just based on the positioning, my expectations are not as high for them. Uh when it comes to Scorpio

them. Uh when it comes to Scorpio tankers which I mentioned uh a moment ago, they have a huge fleet and they also have a lot of LR2s which is one of

the assets which I was saying is maybe not as advantageous just because it tends to depend on the Middle Eastern cargos. So that's let's say a strike in

cargos. So that's let's say a strike in my book even though the the article was just about the MR class. uh uh to their benefit I would say they have booked a

lot of very strange cargos which is something I wouldn't have known unless I've gone like line by line vessel by vessel you know from for example a cargo

from Vancouver to Chile or from China to Vancouver or Alaska to China empty or New Orleans to Poland or um UK to

Northern California so through this the Panama Canal just strange voyages and you know I saw the RA on some of those which were quite good. But in general,

strange voyages tend to uh carry a premium. I've tracked Scorpio quite

premium. I've tracked Scorpio quite carefully and I again I've been a shareholder also for years. Uh they're

also very strong in Latin America. Uh

but let's say they are a liquid name.

They tend to be the name that people think of first, traders in particular when they want to express this product chamber trade. But uh they also tend to

chamber trade. But uh they also tend to be the one which is the most obvious and I often like to play in the less obvious names. Uh another one which was quite

names. Uh another one which was quite balanced similar to Argmore was Hafnea.

Hafne is in an interesting position because they have a large LR1 fleet which is kind of like this in between segments. I think they're going to do

segments. I think they're going to do well but I really like the fleets which are heavily skewed towards MRS at the moment. I

think that's going to be the one. So,

for example, you know, Torm has a kind of a barbell approach where it's LR2s and MRS and very few LR1s. Uh the LR1 is going to piggy back on some of that MR

strength, but I think Hafne has something like 30 of them. So, are they going to find enough cargos?

Not so sure. It's a it's a great company. Uh they're very predictable

company. Uh they're very predictable when it comes to governance, that kind of thing. They are actually seemingly in

of thing. They are actually seemingly in the process of acquiring Tor. They've

already acquired a very large stake in the company and I'm just waiting to see if they're going to acquire the rest of the shares that Oak Tree was sh selling off. So that's kind of like an

off. So that's kind of like an intriguing little uh you know aspect of that. But I think it's not really going to matter. Both

companies are making so much money. Uh

it's all going to shake out in the end.

Might I be able to guess that because Oak Tree, distressed debt and credit investor, owns a stake in this, did this company once go bankrupt? Yeah, they

were in deep trouble in the uh it's it's just interesting what happened because Torm is one of the companies which has been publicly listed for the longest of all the tankers and at the

end of the last cycle famously management from what is Scorpio tankers today for a company which is called OMM or OMI was the name I think the company

but the ticker was OM they sold not quite at the top but they sold very well at the last cycle so they had a mix of product tankers and large crude

carriers, a little bit like Seaways is now. And they sold their crude tankers

now. And they sold their crude tankers to TK and they sold their product tankers to Torm and then they were done.

You know, they had their their sweep exit and then the strength lasted for another year or so and they must have just been kicking themselves saying, "Oh, if only we had held on longer." You

know, it's it's just like when you as a trader, if you if you sell too early and you watch your positions go up another 40%, you're thinking, "Ah, how stupid. I

you know, I left all this money on the table." But actually, the crash was

table." But actually, the crash was quite dramatic after the great financial crisis and Torm and TK were in deep trouble. They became distressed and as a

trouble. They became distressed and as a part of that process, Howard Marx of Oak Tree, who's very good with shipping actually, he has a very long time

horizon. He bought quite well. Uh so he

horizon. He bought quite well. Uh so he actually was the largest shareholder in Torm for over a decade and I think it was also the largest position of Oak

Tree. I think probably people were

Tree. I think probably people were perplexed about that but he just thought it was cheap and kind of an inevitable success at some point. I think that he his entire cost basis was paid back in

dividends uh after COVID. So he you know he's done well.

He he has. So before we get more into the stocks, Ed, tell us a little bit about the work that you provide to clients uh who who are subscribers of yours both on the Substack of

Misadventures in Shipping as well as your private Twitter.

Yeah. So initially I had a free Twitter account which I just was very active on.

One might say compulsively active. It

became part of my research process but also it allowed me to meet a lot of people. So that was really useful. And

people. So that was really useful. And

then a lot of people when Substack was taking off three years ago encouraged me to do something. So I started writing a few articles. And then there was this

few articles. And then there was this wonderful guy who's also named Ed who pledged a subscription. And I didn't even know what that meant. And it just meant that he was encouraging me to

start a paid tier. So I did. Once I

started paid tier, I got my first few dozen subscribers. And then I felt

dozen subscribers. And then I felt really guilty because I just felt like I should be providing some content. and it

snowballed into something which has become a lot more intense I have to say than I was anticipating. Uh I've written hundreds of articles now uh deep dives on some really specific aspects of

things. So it's become like a repository

things. So it's become like a repository of knowledge that you can go back and learn about if you don't understand let's say the rates that I'm posting on Twitter. And then one day, I think about

Twitter. And then one day, I think about a year into it, I went on a ski trip with my family to the Alps. And it just became impossible to uh to write these

long form articles with my kids around all day. And so I started a private

all day. And so I started a private Twitter account to continue the dialogue and just to keep subscribers up to date.

And it turns out that the private Twitter, which is like real-time information as soon as I hear a rumor about a ship sale or about a new fixture or about something having to do with a company, you know, to be clear, like

some of it is bank research type analysis, but a lot of it is like whispers or, you know, something I'm seeing which no one knows about yet, which they might read about in the press

in three days, but, you know, information has not been diffused widely yet. and the subscribers really really

yet. and the subscribers really really took to that and they love it and some of them actually spend more time on that than reading the articles now. So I

decided to keep doing it. Now I do both.

So basically every single day I'm either tweeting you know dozens of times per day on the private account with respect to different markets like dry bulk, LPG,

sometimes the underlying commodities, aluminum markets, boxite, uh coal and then of course the the shipping and then I'm writing the articles which kind of

tie things together because I find that the tweets they're helpful but like at some point you need a structure to understand the company or you want a an examination of the filings. So that's

really what I'm doing. It's pretty

intense. I think um it it suits people who are intellectually curious and who really want to dig deep and who want to have an edge in the sense that not just buying a ticker but really want to go

deeper. And I attend conferences. I give

deeper. And I attend conferences. I give

talks also at places like Marine Money.

I'll be going to Posedonia which is a famous conference in the um on the bay near Athens. Happens every two years.

near Athens. Happens every two years.

And that allows me to exchange information with other investors and I often pe meet people who are very serious shipping investors. It's really

like a brotherhood.

So shipping specialists uh are definitely going to find value in your work for you know they probably already know who you are. Let's let's be honest.

What about people like me Ed who are let's say tourists. I enjoy your work and your Substack has been very valuable to me and I I understand it but I

understand it because I do the work where you know if someone was just going to flip through this and they had knew nothing about shipping that uh in order to fully get the value I feel like they would have to go through the work. Uh

would you agree with that?

Yeah, I agree. What I would say is it's not so much that you need a lot of knowledge to get derive value for it from it. you know, in lots of other

from it. you know, in lots of other trades that I'm involved with. In

particular, let's say the underlying commodities, I'll understand some of what I'm reading, but not all of it. And

sometimes I'll try to dig deeper to figure it out on my own. But it's a little bit like learning a foreign language. I mean, I'm here sitting in

language. I mean, I'm here sitting in France, and I remember very clearly when I first moved here, I thought I spoke French because I had learned it in high school. And then I would like go to the

school. And then I would like go to the bakery and order a croissant, and I would have the woman make fun of me because I wasn't ordering it exactly the right way. And obviously the French are

right way. And obviously the French are quite, you know, abrasive about that.

But people have different personality types and that made me want to do better. And equally, when it comes to,

better. And equally, when it comes to, let's say, the jargon involved with shipping, most people, they get intrigued and they want to learn more and they're prepared to just spend time

with it. It doesn't necessarily always

with it. It doesn't necessarily always feel like work. Sometimes it's more just about getting 10% closer to understanding something. And I think

understanding something. And I think that if you're that kind of person, then you would enjoy it. And also, I would just say shipping, if you if you just spend a

little bit of time to understand it better than the next person, you're going to have a huge ed edge in markets.

Because still today people will think of let's say oil tankers as a way of expressing a long volatility trade or uh something to

do with the war. So let's say if the war is normalized tomorrow maybe tankers will sell off because it's seen as a war trade or like you know you would see for example when there were peace talks

between Russia and Ukraine sometimes uh container ships would sell off or drywall would sell off because people would just extrapolate that the war was going to come to an end. And you know,

if you're deep inside or if you're following a little bit more closely, you would be able to have the self-confidence to know that this was a great buying opportunity because the chances of peace happening are probably

pretty low. And also, the chances of

pretty low. And also, the chances of Europe taking, let's say, Russian oil are even lower unless they really have no choice. So I think it's like a

no choice. So I think it's like a process of I guess what I would say is shipping allows you to connect more dots. You know most people they'll

dots. You know most people they'll they'll know a little bit about geopolitics, a little bit about energy markets, a little bit about macro, a little bit about currencies,

but shipping is not something that most people pay attention to. So if you do then it allows you to let's say have like a lattice of information which is

just a little bit richer and you know it doesn't appeal to everybody but I can guarantee that the people you'll meet in shipping are uh let's say more colorful characters than you'll meet in a lot of

other sectors in the market. That makes

it fun. The parties are better.

I believe that's the case. I got to go to one of these parties one one of these days. So Ed. Yeah. And I'm I'd say I'm,

days. So Ed. Yeah. And I'm I'd say I'm, you know, I'm definitely don't want to tell people listening to this, you need to be investing in shipping. You need

to, you know, devote everything to to shipping. But if people are interested

shipping. But if people are interested in investing in shipping stocks, and it sounds like there's, you know, potential opportunity, there's a lot of disruption in in the shipping market and in the global supply chain, oil, everything. If

people are watching this are are interested, I think they definitely should subscribe to your work. I find

lots of value in it. And I think that you know if you want to be successful in markets a lot of the time you have to find out things before the market and definitely before earnings. I actually

was an investor not in tanker stocks but in this container container shipping stock called ZIM and I didn't get in early enough for this but I literally think that there were the dividends paid

in in a year were greater than the stock price was at its lows. It was a it was extremely good opportunity, but you didn't, you know, the the time when oh my god, we made billions of dollars this quarter, the stock price was already

high, so you got to do, you know, you got to do some work and you do do that work all the time. Um, so I I definitely think people, if they're interested, should should follow your work, and I think um they'll get a lot of value out

of it. And I think also it's relevant to

of it. And I think also it's relevant to investors. It's not just shipping as an

investors. It's not just shipping as an industry. Like you you talk about the

industry. Like you you talk about the stocks um a lot and have views on them and have personal investments as well, skin in the game. So, Monetary Mage listeners can get a 20% discount. To

access the discount, click the link in the description and enter your email. If

you don't enter your email, it won't take you to the discount page. And that

will last for 2 weeks after this interview airs. So, in the in the middle

interview airs. So, in the in the middle of April, Ed, going back to the shipping stocks, talk to me about governance. In

a lot of sectors, particularly in US markets, corporate governance is generally seen as as quite good.

Shareholders are generally taken care of. If the stock is wildly underpriced,

of. If the stock is wildly underpriced, there tends to be a buyback. If the

company is earning a ton of money and they don't have a high return on invested capital opportunities, they'll do a a high dividend. I think the shipping industry, you know, I don't think you'll be offended at me saying this, has a reputation for a lot less

good corporate corporate governance.

Talk to me about what kind of bad things happen in shipping and you know do you do you recommend avoiding the bad governance companies entirely and also

what percentage of companies in the tanker market would you say have bad governance versus moderately okay governance acceptable governance versus actually good governance?

Well, it's a loaded question but it's an interesting one. So I'll do my best. I

interesting one. So I'll do my best. I

would say that as a general rule of thumb the let's say the consensus or the even the caricature of kind of a rule of thumb is that you want to avoid Greek

shipping companies. Uh you know

shipping companies. Uh you know traditionally the Greeks have been more adventurous with their governance. Let's

put it that way. Uh but luckily the truth is a lot more sophisticated than that a lot more nuanced and there are exceptions to the rule. The story of why

Greece is such a p shipping powerhouse now is pretty interesting. I just I think it's worth taking a moment to talk about it. So following World War II, you

about it. So following World War II, you know, there were all these commercial boats, merchant boats belonging to America which had been sunk by German

Ubot. And as a result of that, there was

Ubot. And as a result of that, there was this campaign to mass manufacture cargo ships just to be able to carry the cargo uh to the army abroad and also uh for

food stores and everything in the in the US. So those were called liberty ships

US. So those were called liberty ships and they were hundreds of them made and they were kind of made on the cheap but they served a purpose. They were cargo ships and when the war was over the US

started making new ships to replace them and they decided to sell them to their ally Greece for a really cheap price. So

there were a lot of investors who became legendary names in shipping like Aristotle Onases but also Libanas and some others which acquired these ships on the cheap and then they made a

killing in the decades to come in particular in the 70s during events like the Yam Kapur war. So this tradition of uh you know ship owning goes back much further than that in Greece but let's

say modern Greek ship owning dates to that period and it's been an interesting thing because now they use what are called flags of convenience which

basically shield owners from liability uh to make a long story short that means there are you know not like let's say labor unions the way there might be in European uh jurisdictions and it just

makes it uh more regulation light for owners.

In addition to that, there's something called the tonnage tax in Greece, which is essentially a way for these billionaire oligarchs to get around paying taxes on their operating profits

and also on the capital gains from when they sell ships. So that's why, you know, at the moment, I think when it comes to the oil tanker fleet, Greece owns twice as many as China, which is

the next biggest country, which is totally absurd, but it's also amazing.

So an outgrowth of all this is that when it comes to publicly listed companies even in New York because to my knowledge there are no publicly traded companies on the Athens exchange which are something which is kind of ironic

they're all trading on the Oslo exchange or New York and you know some of the dangers to get back to the crux of your question are related party transactions.

So the typical thing that they will do is they will have a private fleet and then the public arm and then they will mutualize costs and such and they might do it in a way which is advantageous to

the private company where they you know kind of have disproportionate part of profits and which bleeds the public company. That might be something which

company. That might be something which you might be if you were like a forensic analyst you would find evidence of that in some of the filings. Um they might also sell ships to the public company

from the private company. They might

manage the public company ships by the private company which has uh the same office in Athens as you know it's like it's basically related party

transactions. That's one of the biggest

transactions. That's one of the biggest dangers. Then you have a whole class of

dangers. Then you have a whole class of owners who are even more uh problematic who uh aggressively dilute in order to buy the assets which are expensive or

they make promises they don't keep in terms of shareholder returns.

Then there's kind of like a middle ground which is companies that hoard cash but don't pay it out. And ever

since that big commodity super cycle in China in the early 2000s, it's become a tradition for shipping companies who benefit from huge uh let's say outsized

gains to pay out large dividends which are earnings based. So, you know, you might sometimes see a a crazy quarterly

yield of like 5% which then everyone annualizes and like, oh my god, 20% yield. But in fact, it just happened to

yield. But in fact, it just happened to be an amazing quarter. Like every

shipping company I've discussed so far today with you is going to have an amazing Q1 and an amazing start to Q2.

And therefore, if they are companies that pay out dividends like Torm and like International Seaways, those dividends will be unusually large.

And are there v variable dividends?

Yes, they are always variable. Scorpio

actually does it more like a fixed dividend, which they're slowly ramping up, which is I think their way of establishing a different investor base, which isn't necessarily looking for a huge payout, but is listen looking for

stability. They're looking for a company

stability. They're looking for a company with a fortress balance sheet uh who, you know, is not going to have any problem buying ships if the market crashes. So, you know, more power to

crashes. So, you know, more power to them. That's great. Some investors are

them. That's great. Some investors are more comfortable with that. But I think most investors who uh are professional shipping investors who really know the sectors well are used to this tradition

which started about 20 years ago with this banker named Hamish Norton who since became the president of Starbulk carriers which is one of the highest

quality and largest drybulk shipping companies which is a fantastic company still undervalued. um and he's a very

still undervalued. um and he's a very very smart guy and he helped kind of institute this tradition of having a carrot for investors in the sense that

if it's in bull market you want to share the proceeds with them and that will entice investors to stick with you uh when times are rough. Now in practice people tend to trade in and out of the

names and they don't tend to hold on to them for years at a time. So that's part of the volatility which comes with the names. But yeah, those are the pitfalls

names. But yeah, those are the pitfalls I would say and you know that's one of the reasons I tend to be quite careful about the names that I focus on that I do deep dives on. essentially my way of

dealing with this issue. Uh not that I don't criticize companies, I do. But I

think it's usually good to just avoid or ignore the companies which are below a certain threshold because it doesn't draw attention to them and then most investors won't even know they exist and therefore the danger is less because my

fear is that if I highlight a company which is really cheap and if I experimented with that once or twice in the past and then they do something stupid and the price, you know, craters 30% overnight, even if I warned somebody

that was dangerous, if you haven't experienced that before, then it's it's really not a pleasant feeling. And I feel like it's just more

feeling. And I feel like it's just more um it's it's kind of a better part of it the service to just ignore the whole thing altogether.

That makes sense. Uh so looking at the like the biggest tanker stocks in the world, I think we talked about maybe four or five of them, but I I'd love to to name some of them that you you

haven't shared your analysis on and you to tell us your thoughts in terms of do you like the company? Do you think they're well positioned based on the product size, the size of the ship, where the ships are, perhaps the

valuation, um, as well as as governance?

So, I think I've got maybe four or five companies I could just, uh, is that it okay if I just quickly get Lightning rounds.

All right. What do you think? What do

you think about Front Line?

Front Line is the go-to name. Uh, great

governance, a great majority shareholder in John Frederickson, who is one of the legendary capital allocators in all of shipping. He's involved in all shipping

shipping. He's involved in all shipping sectors. He's also involved in offshore

sectors. He's also involved in offshore drilling and has been for decades.

uh he is he puts a lot of pressure on his managers. So in a sense you will

his managers. So in a sense you will have professional managers who are very competent running his individual companies but I think that no one has any illusions as to who the real boss is

behind the scenes and he is generous in sharing returns with his fellow minority shareholders which has been a big part of why people love to invest alongside

him. So, uh, Frontline has a great,

him. So, uh, Frontline has a great, let's say, uh, diversified fleet in the sense that it has the three largest asset values in crude tankers, Afrox,

Wesmax, and VLCC's. They recently did a very intelligent transaction where they sold some of the VLCC's and then took the money and recycled it. So, they'll

have new build deliveries arriving in a few months. That was a transaction that

few months. That was a transaction that people kind of raised their eyebrows at because he was buying it from his own private related party. So he, you know, in some ways he has a little bit of a a Greek heritage in his way of running the

the shipping company at some times, but I think that everyone will end up benefiting from that. It's also a liquid name. It's a name which paid out

name. It's a name which paid out multiples of its share price and dividends during the last cycle. And so

people when they imagine what could happen this cycle, they always look back to the last cycle in the 2000s and imagine that the share price of Front Line will similarly go up the way kind

of like a chart of uranium miners does uh in the best case scenario. So you

know great name. Uh I own it. I have

owned it for years. If I was to recommend only one name it probably be that one. It's kind of a no-brainer.

that one. It's kind of a no-brainer.

More than international Seaways.

Well they're similar. I would say international seaways. sort of like

international seaways. sort of like about them is they tend to trade at more of a discount. So you feel like you have a little bit of a margin of safety. Also

I feel like with international seaways owning them is more of a differentiated point of view whereas with Frontline it's very consensus and part of that consensus is priced in via the premium.

So International Seaways for example uh as recently as six months ago was trading at a significant discount and that discount is actually closed. So,

not only do you get the total return of the shareholder returns and the price appreciation, but you also get over time the market recognizing that it probably deserves a higher baseline valuation.

So, that gives you like an extra 15% bump. Uh, you know, I own both of them.

bump. Uh, you know, I own both of them.

They're both great companies. I'm in

more direct contact with Seaways. It

just so happens, but you know, I know people work at Front Line as well, and I'm always following their fleet carefully. So,

carefully. So, I got you. So, so Front Line's a little bit like beta to the tanker market, whereas Seaways is perhaps uh a little a little bit of alpha potentially. And you

know, Front Line is sounds like it's kind of the Exxon Mobile of the the name. It's biggest biggest name.

name. It's biggest biggest name.

Yes. And in fact, that's a great way of putting it. And if there was a tech

putting it. And if there was a tech tinker ETF the way that you have say XLE for the energy sector, Front Line would be the heaviest weighted. You know, if it was like weighted by consensus,

Frontline would have like a 20% waiting and the other companies might have 4% or 5%. And that would surprise nobody. And

5%. And that would surprise nobody. And

in fact, that would probably be a great way to outperform because it just tends to do well. If there is an event, if there is, let's say, something in geopolitics which could be interpreted

as positive tinkers, you want to buy front line, you know, like buy first and think later and, you know, read the headlines and figure it out. It's just

the name that will move first. So it's

good to know.

All right. What about the next biggest one? Formerly known as Euronav now has

one? Formerly known as Euronav now has the name CMBB Tech.

Yeah, CMBBT is a really interesting case because uh they were taken over by the Sunburst family who are you know have a long tradition in shipping also. Uh they

are more well down in dry bulk I would say as an operator than they are with tankers. They've actually sold a lot of

tankers. They've actually sold a lot of their tankers just recently. So they

still have exposure but their exposure is not as heavy in tankers as it was.

they have a lot more exposure in what's called the Newcastle Max uh segment which is drybulk. So there's a really exciting catalyst on the horizon that people should be aware of in West Africa

in Guinea which is the Simandu mine which has been in the works for decades.

It's finally coming online basically because the Chinese invested so much money in in infrastructure uh they've invested in the mine itself and they're helping bring that iron ore very high

quality to market. they're going to be shipping it all the way to China. And so

that's a trend I'm really excited about in that asset class. So there's there's two companies I think which are worth thinking about in addition to the Starbulk one I mentioned earlier that would be Himalaya shipping which is less

liquid but very high quality and then you have CMBBT which is again a liquid play on that. So you know they have a lot of vessels which I don't necessarily want exposure to. They have containers,

they have offshore wind vessels. it's

kind of a a conglomerate and in shipping the conglomerates don't always behave the way they want you want them to uh just because they have this kind of

reputation being diluted a little bit.

So if for example as I was saying earlier if you know that the MR tanker market is the one you want to own and you have one company with nothing but MRS well it makes a lot of sense to just

buy that company as opposed to a company that owns a bunch of other stuff too.

And then you have like Japanese conglomerates which own you know hotel chains and tankers and you know it's very typical Japanese but those stocks don't tend to perform as well because

their earnings volatility are dampened by their uh diversification. So that

could be considered good in the sense that it's safety but they won't be paying out those huge dividends as a shipping company which just does that.

So CMBB very interesting case uh but you know not my first choice for tanners.

It's it's diversified which you don't love and even though you see an opportunity going forward in the dry bulk market they also have some container stuff which is you know you're not nearly as excited about that as you

are uh tankers. Okay the uh then we talked about Scorpio tankers we talked about Hafnea talked about international seaways. Tell me about DHT holdings.

seaways. Tell me about DHT holdings.

DHT that stands for double tankers.

They're one of the oldest companies in the business and they are among the highest quality names in all listed shipping stocks. I would say that when

shipping stocks. I would say that when it comes to governance, predictability, uh, management, acumen, it would be very hard to argue that they are not in the

top three across all shipping stocks.

So, you know, that's high praise. They

are the company which worries me least.

If I was to own a company in a retirement account uh for my wife, let's say, then that would be the one I would own and I wouldn't even check the share price. That's how much I trust them. So,

price. That's how much I trust them. So,

in terms of governments, about as good as you can get and that would be like say top three out of 50 60 names across all sectors. They're also a pure play

all sectors. They're also a pure play VLCC which is particularly exciting because of this dynamic I was describing with respect to Sinaorn the Korean

company which is in the background going to put in a floor to for the VCC market.

If we ever get out of this uh quagmire and the VCC market returns to its positive volatility that we were seeing in February, DHT is going to be among the uh biggest beneficiaries and they're

going to pay out 100% of their net earnings. So there's absolutely no

earnings. So there's absolutely no ambiguity about benefiting as a as a shareholder. They're liquid. They have

shareholder. They're liquid. They have

options. They're actually lower beta, which is not necessarily a bad thing because it's less stressful to own on those days where there's a news headline that hits and a lot of their tanker

names will be down five, six, 7%. Often

DHT will be down just two. Now that

works both ways. sometimes it won't rise as much as well. But DHT has a big audience among the kind of boomer shipping investors. But you know those

shipping investors. But you know those boomers, they're pretty smart. You have

to hand it to them. I don't want to say that in a derisive way. A lot of those people have been in shipping markets for longer and they weigh governance and

management higher than some of the cowboys who are trading their personal accounts, not necessarily managing money. And so DHT can be a lightning rod

money. And so DHT can be a lightning rod for liquidity and for people who care about quality. So that's interesting

about quality. So that's interesting because you have all these like retail traders who maybe follow shipping markets carefully, but they don't have enough money to really move the stocks.

When it comes to managed money, if something happens with tankers, it takes just a couple of managed money accounts to just press a button. They're not

going to be price sensitive. They're

going to move the stock and you'll see it. You can see it on the tape. So, you

it. You can see it on the tape. So, you

know, that's a nice benefit.

Also, and DSG is the stock that they would buy in the same way that like if you're a giant college endowment, you're if you're buying an energy stock, it's going to be Exon Mobile or Chevron or a

big boy. It's not going to be some $200

big boy. It's not going to be some $200 million market cap.

That's right. That's right. It would be your front line. Basically, those are the two that they would, you know, I'm not saying that there are no other better companies, but it's just the obvious play. But also, these are

obvious play. But also, these are reputations which has been which have been earned across decades. Um, again,

you know, predictability is something you pay a premium for with shipping management. People who keep their

management. People who keep their promises, uh, people who always do things a certain way. I mean, it's funny because the DHT CEO and president says

things like, "We we are financing this new build order with DHT style financing."

financing." In other words, he's like coined an expression, you know, it's as if there was like a Japanese company with a handbook, you know, like I remember I bought a Japanese car once and they gave me like the handbook which was written

by the founder. It's a very very Japanese thing to do. And it's like with DHC there's a pride in doing things the right way and in managing risk and in

protecting the downside and these are not things that many shipping companies talk about frankly.

I got you. So in in terms of the intangibles which are very important, reputation, management, prowess and integrity, you give them extremely high rankings it sounds like. However, I just

want to point out that in terms of what they actually do, what are the assets and what are the assets doing now, they are as you said 100% in the very large crude container market and that is the least strong market as you said earlier

of what we're talking about so far. So I

just want to you know absolutely be upfront about that.

Absolutely. By the same token, if we see hope for a resolution, uh, then they should stand to benefit.

So, it's an interesting double-edged sword. In a way, you kind of if you're

sword. In a way, you kind of if you're involved in this trade and you're thinking about her moves, you want to own both because you don't know which one's going to work more in the sense

fundamentally.

There's also a pretty strange dynamic which is not entirely possible to explain away which is over the years except for that 2022

uh postRRussian invasion of Ukraine where the three product tanker names outperformed in particular they all tripled it was uh Scorpio tankers armor

tankers and Torm and Hafneia doubled since then even when the companies which own the smaller names are actually outperforming in terms of earnings

because DHT and Front Line are the go-to names. Their stocks have performed

names. Their stocks have performed better, which is bizarre, but I think it's because people just want the blue chips, and so therefore, they don't make

that distinction, but I think a lot of people have been frustrated thinking they can kind of outperform the market by buying lesser well-known names. It's

it's tricky.

That can be quite unpredictable.

Sometimes you say to yourself, I'm going to heavily weight my portfolio this name and it's making more money and the the market doesn't see this. But sometimes

the market never acknowledges what it is you're seeing even if it's true.

That makes sense. All right. We talked

about Torm. We talked about TK. Tell me

about Nordic American Tankers.

Nordic American Tankers is kind of a running joke because their CEO is such a boy choice character who occasionally makes appearances on CNBC. And I would

say that during the last cycle, Nordic American tickers was a big trading stock. And so people who were involved

stock. And so people who were involved in the last cycle, when I say last cycle, what I really mean is 2003 to 2008.

The people who were trading that market then they will flock to Nordic American tankers as soon as there's good news.

They also are a Suezmax pure player and they're the only one. And Swiss Max actually happens to be one of the only asset classes which is you know unambiguously doing really well right now. The problem with Nordic American

now. The problem with Nordic American takers is that they have typically issued a lot of shares. They like to brag that they have been paying out a constant dividend for you know I don't

know how many dozens of quarters but when their profitability has suffered they end up issuing shares in order to keep the dividend going. So it's taking money out of one pocket and you know

into the other. And obviously not everyone pays close attention to those details. But but I would say that in

details. But but I would say that in addition to that the my actual issue with them more so than that is that since the Russian invasion of Ukraine,

Suezmax tankers have benefited because there was great demands to bring Russian oil to India and China and you can't load a VCC in Russia because the ports

are not deep enough. So that really stretched that part of the fleet and it was like this unbelievable gift to Swazmax owners and Nordic American tankers. Their commercial performance

tankers. Their commercial performance throughout that period was not that great. And I found that really

great. And I found that really disappointing because this was their chance to shine and they were the pure play and it should have been amazing.

And if you compare their earnings on a TC basis, which is kind of earnings per day per ship across their fleet, total charter equ what is TC?

The time charter equivalent time it means it's adjusted for all the ballast days when it's empty. And it's

just kind of like what you're earning on an average across, you know, when you work it all out, let's say.

And if you compare to companies with mixed fleets who had a few Swiss Max, those were earning a lot more with the Swiss Max. And so it didn't really make

Swiss Max. And so it didn't really make sense and I found that rather disappointing. So I tend to leave that

disappointing. So I tend to leave that name to other people, you know, they want to dabble in it. But that is one of the the names that I don't own and I I don't tend to own.

Got it. And and that makes sense. And I

I I think it keeping time horizons um is important because I bet you're probably right that the stocks that you like over a longterm time horizon are probably going to do better than the stocks that you don't like. But this stock, you

know, that Nordic American tankers that it sounds like you're not in love with, you do acknowledge that they have a very hot product right now, the 100% crude US max.

Absolutely. I mean, from a fundamental perspective, they have almost no timet coverage. So, it's all spelt market.

coverage. So, it's all spelt market.

They have the right asset class. And

recently they issued a press release with some of their spot rates and they were very impressive. So, you know, we'll see how it comes out in the wash.

But there's another company which a few years ago was quite niche called Okonis EcoTankers which is actually the public arm of a a very long tradition of reef

ship owning and the sun took over the chief executive role about a year and a half ago. The ticker is Eco Eco and

half ago. The ticker is Eco Eco and there have been it's become kind of a cult stock because it's a small fleet.

It was until recently the youngest uh the youngest fleet on the water and they have slowly built up consistent outperformance.

So basically they extract more cash from the same kinds of vessels and they do it consistently and they are absolutely

obsessed with that outperformance and that is really exciting.

You know that is the kind of thing where you say to yourself yes this company does deserve a premium uh because ultimately it trades the same kinds of ships as say Frontline it has maxes and

VCC's but consistently I think every quarter for the last 16 quarters they have earned more money per vessel day than front line using the

same ships. So you could explain that

same ships. So you could explain that various different ways but they're clearly doing something right. They're

also keeping their language on the balance sheet, which means they're juicing their earnings.

I've spent a lot of time studying what they do. They're probably the best

they do. They're probably the best commercial operator in the space. They

take pride in it. They take it very seriously. They eat, live, breathe this

seriously. They eat, live, breathe this stuff.

They compare themselves constantly to other owners. Like, it's it's a yeah,

other owners. Like, it's it's a yeah, it's a point of pride to when the numbers settle for them to be the best.

So for me, even though Okonis, so eco isn't as pure play, they are like spot market junkies.

You know, they are going to be comparing every single fixture they do to everybody else. They're going to be

everybody else. They're going to be sharing it with their friends. If they

fix under somebody else, their friends are going to make fun of them. you know,

like it this whole, you know, under the surface, this culture of spot market competition within owners in Greece is

very particular. These guys go to the

very particular. These guys go to the same restaurants, they went to the same high schools, they all know each other, you know, like their kids go to the same

schools together. Like, it's a very,

schools together. Like, it's a very, very small world and very competitive.

So even though a lot of these guys became ship owners because of their families, they're not resting on their laurels. And that's part of the dynamic

laurels. And that's part of the dynamic which I think learns it's it's very exciting because as you were saying earlier, a large part of the fleet is like

stateowned companies. So when you when

stateowned companies. So when you when you take the large tankers, you have Iran is one of the largest owners of large tankers.

uh Bahri, which is Aramco, uh Saudi Arabia. Yeah. Saudi Arabia,

Costco, the Chinese, you know, if you look on like the top owners of tinkers, a lot of is basically just state logistics companies. And then you have

logistics companies. And then you have the Greeks and it goes like boom boom boom boom boom boom boom Greek creek creek creek creek with 20 vessels each and uh yeah that's that's how we as

investors can gain access to the market.

You know, we don't buy to any shipping stocks generally. So, are there any It

stocks generally. So, are there any It sounds like if there's a company whose corporate governance you're not in love with. I'll put it that way. It sounds

with. I'll put it that way. It sounds

like you you prefer just to not talk about it rather than to actively kind of, you know, trash the name. So, I

respect that. Are there any Greek shipping names that you would actually like to talk about that you actually think are present some opportunity? Or

if if the answer to that is no, I think that kind of answers my question.

Yeah. Well, the two which I own and which I really believe in are the the tanker company I mentioned just a second ago, Okianis. Uh so that's for the large

ago, Okianis. Uh so that's for the large crit tanker. You know, I I do trust

crit tanker. You know, I I do trust them. Uh for matters of liquidity, I

them. Uh for matters of liquidity, I might not size it the same way as I might DHT or Frontline because, you know, if I change my mind, then it would be trickier to get out of the entire

position. Not that I'm really that

position. Not that I'm really that worried about that to be frank, but it's just something which goes into the calculation of what do I own and how do I weight it. Starbolt carriers is a very

reliable operator in the dry book space which I'm very excited about for different reasons than tinkers. That's a

different time horizon. It's a different thesis but but they're Greek. And they're

Greek.

And they're Greek. Yeah. Almost entire

management is Greek. They have this guy I was mentioning earlier, Hamish Norton, who was a a banker in New York for many years and who is kind of like the token American uh I like to say he's a very

good presenter. He's a very intelligent

good presenter. He's a very intelligent person. He also sees the big picture in

person. He also sees the big picture in a way which most shipping management uh teams don't. Uh so you know that's

teams don't. Uh so you know that's that's an exciting opportunity. They've

done everything right. I think they're very generous with shareholder returns.

They're disciplined. It's a massive company.

uh in terms of their fleet and yeah it's it's going to be as far as I'm concerned the liquid name to own if dry bulk takes off. So you know those are two good

off. So you know those are two good examples. I think that maybe a different

examples. I think that maybe a different way to to think about it is that in any one of these segments there's like a spectrum.

Yep.

And it's very very shades of gray type thing. and everyone will have their own

thing. and everyone will have their own line. They don't want to go below, but

line. They don't want to go below, but it's pretty obvious, you know, which are the blue chips, so to speak. That's easy

to find out. What's much trickier is knowing what to avoid. And that's

something, you know, I do talk about openly for subscribers on the Substack and on tweets and on Substack chats. You

know, I do go into it and also if people push back, then I'll say, "Well, look, you know, I'll show you the filing where they did something I don't like." Or

I'll say, well, you know, this is what I've been hearing about something that management did and or this is what makes me a little bit uncomfortable or this is how they changed their discourse about a promise they made. And then, you know,

everyone makes their own decisions.

There are people that just prefer lower valuations and don't care. And I respect that, but I'm not one of them.

That makes sense. What about Sakos Energy Navigation? It sounds like it's a

Energy Navigation? It sounds like it's a Greek company. Is that Greek?

Greek company. Is that Greek?

It is Greek. Yeah. That's like an empire. uh the founder and CEO is a

empire. uh the founder and CEO is a legend in Greek shipping circles. He

also has a large private fleet.

I would say that it has consistently traded at a almost absurd valuation and therefore it's become the darling of high valuation or low value low valuation.

Low valuation. And it's become the darling of the deep value investor who says, you know, this is trading at 40 cents on the dollar in terms of its assets. You're buying Frontline at a 10%

assets. You're buying Frontline at a 10% premium. I'm buying SACO at a, you know,

premium. I'm buying SACO at a, you know, 60% discount. My margin of safety is

60% discount. My margin of safety is better. I will outperform you over time.

better. I will outperform you over time.

That has not proved to be the case.

Ironically, they, you know, it's it's been pretty correlated.

uh they do not have the policy of doing meaningful buybacks or dividends and so again it's one of these things where there's so much choice now that

you really don't need I mean I personally don't feel the need to have exposure to tacos necessarily sometimes it can be interesting to have a catchup play so if you have like eight stocks in

a sector and six of them have run really hard and two of them have bought that could be an interesting opportunity Sometimes trading liquidity is less. So

with less money a stock will move more because if someone wants to buy 2 million of notional it'll move tacos. It

won't move front line in the same way.

So you know all that comes in the decision-m process. I have zero concerns

decision-m process. I have zero concerns about the long-term viability of Tacos because he's a very responsible owner

and manager and he's constantly renewing his fleet. His fleet is mostly Japanese

his fleet. His fleet is mostly Japanese and Korean vessels which are the highest quality in the world. Um, he's going to be around. It's a dynasty basically, but

be around. It's a dynasty basically, but it's not really a publicly listed shareholder return machine in the same way that some of these others like there

are companies which are clearly have been designed to a benefit from a very specific bull market and benefit

shareholders by paying it all back. So

the the perfect example of that is Himalaya shipping which was originally listed just in Oslo now has a New York listing and it's like if you bought the IPO and just did nothing you have done

extraordinarily well and it has been designed to pay everything back to you with high leverage. So that's a very different model than a tacos where you

basically have to care a lot about the marktomarket value of the assets and say I will never be directly paid back in earnings because the the company's going

to make a mountain of profits and I'll never see a dime but the assets will appreciate and the stock will go up. So,

you know, maybe it doesn't matter, right? And there is a difference between

right? And there is a difference between a good company that uh in in the industry and a good company to own or a good stock to own. Like it's possible, yeah, they're you said they're constantly refilling their fleet. That

could that is a great thing for the company, but if they're doing that by issuing shares instead of paying dividends, like that's not amazing uh long term. I want to ask you about the

long term. I want to ask you about the valuation. So, um there is a company I I

valuation. So, um there is a company I I don't own it now. I I had owned it at the past. I think I bought it at a PE,

the past. I think I bought it at a PE, you know, less than one. Imperial

Petroleum, I know it's a Greek company and I know if you had, you know, if you if you thought glowingly of their management, you know, likely you would have already said so. Um, but that's an example of a company that trades at a low valuation. So, it sounds like the

low valuation. So, it sounds like the companies that perhaps have some management issues do trade at a lower valuation. The companies that you have

valuation. The companies that you have spoken positively of so far that you think their management is good, you like their assets, you like what their assets doing right now. um what valuations

would you assign to them on a PE basis with with rates where they were three months ago?

What about with rates where they are right now? You know, what are those PE

right now? You know, what are those PE uh uh multiples? And also, do you think PE is is the way to value it or you like price to book? Um tell us.

Yeah. So, typically the metric that people use is uh price to net asset value. And the reason is because when it

value. And the reason is because when it comes to multiples, there's a leap of faith involved when you're using multiples, which is, you know, I think um Peter Lynch talked

about this, how cyclicals are cheapest at the top. And what happens is if you in in shipping what tends to happen is if you're extrapolating peak earnings then you're not being

realistic because yes the company might make half its market back in cash market cap back in cash in the next six months which is the case with TK tinkers at this level let's say maybe or maybe

it'll take a year but it's it's absurd because they're already sitting on 30% in cash of their net asset value. So,

um, I find multiples tricky. I find that it's usually better to buy when multiples look awful, when they're trading at a PE of, let's say, 10 or 12,

because it kind of expresses the fact that earnings are pretty bad. And you

know there's this kind of saying which some of us shipping investors like to throw about which is you want to buy low dividends and sell high dividends because when the dividend is low

earnings have been bad and pessimism is pricing the stock and no one is expecting any upside and they're probably being overly pessimistic.

And then when the big blowout dividend is announced, let's say on earnings, and everyone's buying into that dividend because they want the, you know, 6% or 7% quarterly yield, you usually want to

be selling to that person because it's likely that whatever earnings they just benefited from, you know, 3 months before are not going to continue

indefinitely into the future.

So, I think it's worth thinking about.

uh in that sense you really want to be buying pessimism I think is a better way of thinking about it. You want to be buying dislocations which usually come from selloffs which are not warranted or

which are exaggerated. So in that sense like there are traders who use RSI or technicals to analyze what's happening with shipping stocks a lot and they don't even pay attention to the

fundamentals so much and while I sometimes use technicals to inform to not make a big mistake and to buy uh extreme moves let's say extremely

oversold names which is definitely not the case right now to be clear I think that's a better framework to think about things it's also a better

framework to think about sectors that people aren't talking about. So, uh, for example, LNG freight has a lot of problems right now and there's only one

ticker you can use. Well, I guess there are two C CEC capital and then also Flex LNG. LMG is really the

LNG. LMG is really the What about Golar LNG? GLNG.

Golar RNG sold its vessels to Coolco, which then delisted. So, Golar is more of like an LG infrastructure play. It

was traditionally part of the shipping universe and so shipping investors love it and it's still discussed among shipping investors, but to call it a shipping stock is is really a stretch.

But when it comes to the LMG, just the purely the shipping side, no one's talking about it. The only people that are are extremely negative. Nothing

positive is priced into the stock. Uh

LNG is what I mean now. So that might be something to think about. Uh often times when there are broader market rotations, let's say away from industrials, away

from small cabs, shipping tends to be caught up in those downdrafts. In the same way that you you

downdrafts. In the same way that you you probably remember a couple of months ago, everyone was crazy about the equal weighted S&P and how that was outperforming and how European bank

stocks were going to be, you know, you know, they're going to have a golden age and all that kind of stuff.

And it was interesting because a lot of shipping stocks like dry bulk stocks whose earnings had not changed actually benefited a lot from that. So oftent

times shipping stocks or even offshore stocks for that matter which is another thing I write about in the substack they will often just randomly move with these crossurrens.

And so it's really useful to be so in touch with the fundamentals that you can clearly distinguish when that makes no sense.

The way that Offshore sold off for like 12 months consecutively during 2024, but the earnings of a company like Tidewater, which is one of my favorite names, just kind of a cross between

shipping and offshore, I mean, they were just throwing off free cash flow absolutely solid. and they were selling

absolutely solid. and they were selling off as if they were being decimated financially. So, what's great is when

financially. So, what's great is when you're really deep into these names, you're following what the vessels are doing. You're getting intel about the

doing. You're getting intel about the contracts from people in, you know, Brazil or the Middle East or the US Gulf or Norway. You know, people are DMing me

or Norway. You know, people are DMing me on WhatsApp on my phone and I'm like, you know, I'm getting all this stuff and I'm sharing it with subscribers. So,

then we can hold through these downdrafts and we're like, this is BS.

I'll add I feel very confident. You

don't feel like that awful feeling where you feel like you might be missing something that the market's trying to tell you something that there's a risk which maybe you're not appreciating fully. But if the if the companies are

fully. But if the if the companies are doing really well and the market just decides to randomly sell them off then it's an opportunity. So that's where you know you on technicals you could buy

oversold but it really feels different to be so deep in the markets to know that earnings are going to be great and that this is just a temporary

dislocation. You talked about how LG,

dislocation. You talked about how LG, liqufied natural gas tankers, you could see an opportunity there because that's an unloved sector right now. Based off

of where oil tankers and refined products, what we what we've been talking about, based on where those rates are, uh, as well as what the stocks have done, they they've rallied a lot. It sounds like the tanker market is

lot. It sounds like the tanker market is not is not unloved. So, how do you feel about those stocks right now? What's

your analysis? You know, you've you've shared your alpha view. uh of the companies in painstaking detail, but if you could just broadly describe kind of

your your beta view that uh you know how how bullish are you on oil tankers generally and how that compares to you know kind of your average view on on oil tankers u and then I I've got some

scenarios to run by you.

Sure. You know, it's ironic, but I feel like the really non- consensus view is that we are not bullish enough on oil

tinkers and that even if the stocks are fully priced on a conventional valuation basis, I feel like there's some potential catalysts on the horizon which are really exciting. The first one is

that just before the war started, uh there was this dynamic I mentioned earlier about Sinaore kind of cornering the large VCC market. And you know, I've done a lot of work analyzing historical

data going back 35 years and in some instances going back even further when I've able to access that. And

traditionally what happens is the largest tankers for economies of scale do well and everything trickles down. So

if it's a true bull market, all tanker owners will do extraordinarily well. And

there's a couple of things I'm really excited about as things stand today, even with all the uncertainty. The first

is that one of the most bullish things that can happen in any shipping segment is congestion as strange as that sounds.

And that is the reason why you you mentioned ZIM earlier. Why that's one of the reasons anyway why Zim did so well in the aftermath of COVID. It's not just because people were ordering a lot of

consumer goods on Amazon and there was a surge in demand for container vessels, but also because there were problems processing those goods at Chinese ports

and upon arrival west coast or east coast US because of COVID restrictions.

And then there was a similar dynamic with drybuilt vessels which was the biggest bull market in recent decades in 2021 because of COVID. And so let me describe what I see playing out in the

next few months when we start to see some kind of normalization. Just before

we got on to talk, there were a few two VCC's which went through the Hormoo Strait for the first time since this conflict started loaded which belong to

Oman which is extraordinary.

Now, it's important to contextualize that Oman has close diplomatic relations with Iran, has served as a go-between and a neutral party at all times, even though they've been attacked. To their

credit, they've kept their cool. They

technically control the Hormoose Strait jointly with Iran, who has the north and Oman has the south, but they were able to sail through without going through the famous, you know, toll booth

trajectory, and laden with cargo, which is quite something like in broad daylight with their AIS on. So, this is what I've been waiting for. I've been

expecting this to happen two weeks ago, and I'm really disappointed that it hasn't. But now that it has, I think

hasn't. But now that it has, I think there's hope that we will see a beginning of some kind of normalization.

So, if vessels feel confident going in and out, if China puts pressure on Iran to let its vessels out and to go in and get new cargos, then what we're going to see is all the storage tanks which have

been filled with crude when everyone was shutting in production. So in Saudi, in Iraq, in Kuwait, all these places, they're going to drain those storage tanks and all these it's going to be like a feeding frenzy at the zoo, you

know, when the the person who takes care of the lions like throws the red meat and they all come together and kind of, you know, fight each other or maybe a better metaphor is like pigeons with

popcorn when you're at the park. It's

going to be a feeding frenzy. All the

tankers are going to show up at the same time. And we already have a kind of an

time. And we already have a kind of an appetizer of this dynamic on the west coast of Saudi Arabia where Aramco fixed 40 tankers to come in and they can only

load three or at at a time. So or maybe it's four I think but I think it's the the the flow pressure which is limited to a certain number of barrels per day.

So you know the other 36 are just sitting there and that soaks up capacity for vessels to just be sitting there doing nothing. It means that they can't

doing nothing. It means that they can't go work somewhere else. It means that they are essentially removed from supply and that's going to happen in the Middle Eastern Gulf. We're going to have dozens

Eastern Gulf. We're going to have dozens of tankers waiting and they get paid to wait if they have been chartered by an oil company. And if the oil company if

oil company. And if the oil company if it's their fault that they can't load, which it will be in this case because it's simply going to be impossible to get everything logistically ready on

time. So in other words, there's going

time. So in other words, there's going to be traffic jams. There's going to be a traffic jam in the Far East where they're discharging. They're all going

they're discharging. They're all going to arrive at the same time. There's

going to be a traffic jam in the Persian Gulf. All the vessels that went to the

Gulf. All the vessels that went to the west because they weren't expecting to be able to load a Ramco oil anytime sooner. They're like, "Oh my god, I got

sooner. They're like, "Oh my god, I got to go back to the Middle Eastern Wolf."

It's just going to everyone's going to be in the wrong place at the wrong time.

That inefficiency is going to cause a lot of excitement when it happens. So

that's our first catalyst. The second

catalyst, and you know, it's in a way as far-fetched as the catalyst of the of the Korean guy who bought all those vessels imagining a war is Israel bombing Iran and all that kind of stuff.

Uh it's one thing for an Israeli to say that, it's another thing for a Korean to say that. That's pretty impressive to

say that. That's pretty impressive to have made that call. Uh but what I see is I see the endgame of all of this at

some point is that Iranian oil will no longer be sanctioned. In other words, some kind of deal will be had.

Some new government will form. I'm not

saying that it's going to be a democracy. I'm not saying that the

democracy. I'm not saying that the Iranian citizens are going to be pleased with the results, but I do think that Trump really sees the Venezuela template as a model. He would love to get

something like that going with Iran. I'm

not saying that he'll be able to. I'm

sure that Iran hates that idea, but it would be extremely profitable and beneficial for everyone if that were to happen. If America were to be able to

happen. If America were to be able to send its petroleum engineers to Iran to help them uh with their, you know,

refining also uh there could be it could be really a win-win. I think that Israel would not be pleased.

uh especially because Trump would probably have no problem with current IRGC related uh politicians just remaining in post as long as that kind of deal could be worked out. Israel

might be livid but that's another story.

There will be some mechanism by which Iranian oil will no longer be sanctioned. This happened before there

sanctioned. This happened before there were waiverss in in uh you know during previous negotiations with Iran in 2015 with Obama. Uh there was a very specific

with Obama. Uh there was a very specific example which could be used as a template where Iran then needed to uh check the maintenance of its tankers and you know 6 months later front line was

carrying Iranian oil. So it is possible if that happens that's the dream scenario. It is the ultimate catalyst

scenario. It is the ultimate catalyst because Iran's tanker fleet is almost all 20 years old or later or older.

Those ships cannot be successfully vetted by the Exxons and the Chevrons and the BPs of the world. So they will have to either be scrapped or be used as

storage, but they will leave the fleet.

And that means that we will have even more barrels of demand. You know, I was talking earlier about how you having lots of cargos is like the wet dream of

a tanker owner. It is what matters. It

doesn't matter if the oil is expensive, if it's cheap, there just has to be a lot of it. And that's what we're going to see when Iranian oil comes back to the world market. Ideally, Russian oil would come back to the world market,

too.

I don't know if Europe's going to take Russian oil. That's a different story.

Russian oil. That's a different story.

But ideally, you would want as much oil as possible competing for vessels. If

that happens in the next 18 months, let's say, that could be a very exciting scenario for the front lines, the DHTs of the world.

And that would be like a whole another level of profitability.

And I think we'll see such outsized earnings and then as a result dividends that we're going to have $20 stocks paying out $5 dividends and therefore

this kind of cat and mouse routine where the dividend keeps being so big that the stock price resets but the total return is going to be insane. So that's what I

think is possible and is the market doesn't believe it quite yet.

But obviously it's better to buy on a dislocation. If there's bad news and the

dislocation. If there's bad news and the stocks sell off, that's a much better time to buy. Don't get me wrong, but in the last year or so, more people have been left waiting for a better valuation

than anything else, right? And I did just pull up those

right? And I did just pull up those numbers earlier. I referenced ZIM how

numbers earlier. I referenced ZIM how that in a year they paid out more dividends than at one time their price was and I I I remembered correctly the the market cap when they IPOed was about

1.3 1.4 billion and in a year they did pay uh out over $3 billion in in dividends. So Ed you talked about how

dividends. So Ed you talked about how the price of crude oil and the price of shipping is not often correlated is not always correlated on a fundamental

basis. However, a lot of uh macro

basis. However, a lot of uh macro non-speists often think they are. And

one example is that even though the closure of the straight Hermuz has been bullish for the price of oil, very much so, and bullish generally for tanker shipping, which we've been talking about, you're saying that if the

straight reopened, that could actually benefit a ton of crude tankers. Even

though the straight reopening would of course be, you know, quite bearish on a relative basis for the price of oil just because, as you said, it's like lions at the zoo when it's feeding time. Is that

mean that if you're long these uh oil tankers, you actually kind of want the straight of Hormuz to reopen? And also

the fact that this this uh market has been so bullish for the west to east small product tankers that we've talked about.

Um, is that dynamic going to be over if the street reopens?

Yeah, great question. Look, I think that it will to a certain extent. I mean, we in theory should go back to a version of the market we had just before the war.

And the version of that market was that all of the smaller vessels were profitable.

In fact, very profitable, but just not as extreme in balance where the small is doing better than the big. So, I think that's where the adjustment will be

made. Also, I think it's just better for

made. Also, I think it's just better for everybody in terms of macro, in terms of, you know, GDP, in terms of inflation, in terms of uh so many lives

which are being negatively affected by this war if it was to stop. So, it's

it's really a a bigger package. Let's

say I don't feel like tinkers need this in order to do well. And that's why I think that either way, they probably will. I think it's it's a nuanced

will. I think it's it's a nuanced argument, but the worst case scenario is for the tinkers and for the macroeconomy is if we have this kind of almost full closure which becomes

semi-permanent, that's a disaster. That

is absolutely disaster because then the knock-on effects mean that demand destruction kicks in probably a lot faster than people think. And even if

you have a few great fixtures going long distances, it's just not enough. So that's if the straight

enough. So that's if the straight remains closed, obviously a disaster for the world and we are hoping that that does not happen. But you're saying the straight remaining closed is a disaster for shipping. Even though the closure of

for shipping. Even though the closure of the straight shortterm has been very good for shipping.

Yeah, that's right. Because it's very simple. It's because at the moment

simple. It's because at the moment prices are high in Asia, but they can still afford to pay them. But if this if this disaster goes on too long, people are just not going to want to pay those

prices. It's going to get to a point

prices. It's going to get to a point where and it's not just consumers.

Remember it's industry you know industry depends on cheap feed stock and cheap inputs in order to be profitable whether it's mining or whether it's heavy industry whether it's petrochemicals

which we depend on for plastics for car manufacturing for so many different things everything that we take advantage of and take for granted in daily life I'm not saying it's going to grind to a halt I don't want to be too much of a

doomer but it's going to really be compromised and that's going to affect sovereign budgets as well. I mean, think about how destabilizing it could be if

so sovereigns like I mean Saudis actually managing to compensate because the price of oil is so high and they're able to still pump out a lot but Iraq is

going to become very unstable soon. Uh a

lot of these countries are going to their instability is going to spread through the region and this is going to be a problem for everybody. So I think that's not something to be taken

lightly. You know, it's because I focus

lightly. You know, it's because I focus so closely on the um the ability of shipping names to benefit. Uh you know,

I don't want to be too sanguin about things or uh too nonchalant about the suffering which is happening. And that's

why I try to take the point of view that a reopening which is messy is kind of ideal because it means that there are still disruptions and inefficiencies

and select tanker owners will make a lot of money but the world will start to kind of see the light at the end of the tunnel. I think where this gets really

tunnel. I think where this gets really depressing is either if we have an extreme escalation on the part of the US and Israel which then leads to a

counterattack which permanently takes some of those Middle Eastern resources offline that is going to become a historic disruption which could cause a cascading

macronomic effects and then as I like to say shipping stocks going down will be the least of our worries if that's what happens. So hopefully people are going

happens. So hopefully people are going to act with restraints.

And I want to ask how much of you saying if the straight remains closed eventually these shipping costs are going to go down just because the Asian refineries won't be able to pay for it and there'll be demand destruction. Uh

how much of that is basically a prediction that refined products in Asia which are currently trading at $200 diesel, $200 jet fuel extreme are going to go down? Like if diesel and jet fuels

stay at $200 and WTI, you know, Texas oil is $110, $113 uh as we record today, it is it still going to be just wildly profitable to make that trade and the vetos and trifigurers of the world are

still going to be paying out uh a tremendous sum to these shipping companies to make the to make the the track.

Yeah, I think that's that's a good thing to point out. As long as the economics make sense, those barrels will be moving. But it also takes for granted

moving. But it also takes for granted that there's a certain baseline of demand. So for example, these voyages

demand. So for example, these voyages that are going to strange places and which are long voyages are usually in addition to all the normal voyages which are happening underneath the surface and

which no one really cares about because they're not as sexy to tweet about and you know cheer on and that kind of thing. But if the baseline economic

thing. But if the baseline economic demand uh is hurt, that's where things get dicey. And you know, if you look

get dicey. And you know, if you look back to uh crashes in the offshore market, for example, I've gone back decades in some of my articles tracing

what ended offshore cycles. And you

would think that it would be like oil market specific things or geopolitics or something, but actually it was always an economic meltdown, which something which

had nothing to do with uh with offshore rigs per se. It's not that there were too many rigs or not enough being invested in capex. It was that that there was actually an economic meltdown.

So you're saying if the straight of moose reopens that could be negative for oil prices but good for oil shipping stocks, the tankers. What about the reverse?

There are basically three scenarios.

There is a scenario where it opens completely and somehow was normalized within a week. That will be fantastic because of the congestion element. And

then hopefully get we back we get back to our previous bull market. So that's

great. Maybe tinker stocks will sell off because they have been perceived to be beneficiaries of the war. But that's

just a blip. That's, you know, it's a buyable dip.

Maybe we have this messy normalization where there's like a toll booth and some more attacks, but still more vessels go through. That's probably going to be

through. That's probably going to be okay. It'll be messy, but it'll be okay.

okay. It'll be messy, but it'll be okay.

But if Iran like doesn't let ships go through and continues to attack and in a month we're still sitting in the same scenario we are now, you probably want to have sold well in

advance of that because the market's going to start to smell the economic damage it's going to do and the entire market will be 20% lower anyway by then.

So um yeah, this won't be won't be a shipping problem, but the price of oil will be higher. So

you think that there could be an inverse correlation between the price of oil and the price of oil shipping stocks? That's

interesting.

Yeah. Yeah. Some people even like to think of shipping stocks as a hedge for their oil longs. Or some people will buy long oil exposure via ETFs or futures as

a hedge against their shipping stocks and their let's say uh index funds or their tech or whatever it is. Because as

we've seen in the last few weeks, every time there's a kind of a riskoff move and oil rips because it's usually related to horm news, well, that becomes like a nice kind of hedge, very

predictable mechanism. Other things have

predictable mechanism. Other things have not been as predictable. Like all of a sudden, gold has become a risk on asset.

Uh, you know, some other commodities have sold off in strange ways. It's

become a little bit less clear how things are supposed to act. But yeah, I think the the main thing to to keep it an eye on when it comes to shipping stocks in any sector is underlying

profitability.

So what you want is profit, but you also want visibility on future profits. So if

these profits are great, but they're going to evaporate next week, get out.

I gotcha. Well, on your on your website, you have a a Homer Simpson meme that says, "Doomers get clicks, optimists make money."

explain that philosophy which I agree with and h uh how does that philosophy apply to right now when uh it's it's a little hard perhaps to be optimistic

about the world.

Yeah, I agree. I informed this view with something that you know geopolitical strategist Marco Papich has talked about which is this framework of material constraints which doesn't always work

but I really like it because it allows you to kind of take an eagle-eyed view of what's happening and not get too obsessed with the chatter or the politics or the declarations of I want

this or I want that. It's more what are you forced to do whether that be politically in terms of your electorate

or in terms of your economic constraints. So for example, we don't

constraints. So for example, we don't really know the dialogue which is happening between Iran and China right now. But we do know that China is the

now. But we do know that China is the only buyer of all of Iran's hydrocarbons and that that funds more than a third of Iran's budget, perhaps more. And China's

money pays for the drone manufacturing and China exports the components and arms to Iran. So if China doesn't have access to energy the way it needs to, in

other words, if you're compromising China's energy security, that's not a long-term strategy you want to pursue. So therefore, whatever Iran

to pursue. So therefore, whatever Iran says, that is a lever which will be pulled at some point. And that leads me to believe that this will not, you know, we won't be talking about this in six

months with no ships going through. What

I think we could see happen is friends going through, which would mean that Iran would make one-on-one,

let's say, agreements with individual countries, which either have ships and one cargos like India and China, or with co-exporters like the UAE or Saudi.

Maybe we'll see a realignment geopolitically.

Maybe some of Iran's neighbors will come around to its view that America is not really there thinking in its best interests and cannot protect it successfully and therefore you might as

well be realistic about things and pragmatic and openly communicate with your, you know, adversary.

if it allows you to at least get your oil and LNG and NAFTA exports back on track.

I don't want to discount that because I think that that's a logical thing to at least consider if you're in their shoes.

These countries are completely dependent on these industries. And you really have to wonder considering the footage that we've seen of, let's say, UAE

of these, let's say, citizens being in, you know, public spaces having missiles and drones drop on their heads. I think

that Iran has been very clever about the way that it has used what it is able to do to change maybe the perspective of those watching from a

distance.

And I would not rule out the same way that I would want rule out Europe taking Russian natural gas via pipeline. Maybe in 12

months, maybe in less, depends on the circumstances.

Uh maybe they take their oil also. You

know, maybe things really shift.

Maybe the US imports some of that Russian heavy residual fuel for its refineries in 12 months. I mean a lot of things can happen and uh I think that

just excluding certain things from possibilities is probably unwise. So

I like to say the spice must flow and energy markets find a way. It's a little bit like when you have a leak somewhere uh in your house like the water just finds a way its way into a crevice or

you know there's a certain kind of almost like intelligence in the way that things tend to flow. And I think that the path of least resistance here is for some kind of flow to be re

reestablished. And I remain optimistic

reestablished. And I remain optimistic that that will happen. And I refuse to believe that with so many people wanting the same thing, including Iran,

who ships its own oil.

I don't I don't see that this turning into a major economic meltdown. And

therefore, I want to be realistic about what's happening. I want to acknowledge

what's happening. I want to acknowledge the pain of the seafarers and the citizens of those countries and not be flippant about it. But I also want to be realistic in the sense that this is not

going to be the end of the world and something's going to happen whether it's catalyzed by Trump or an alliance led by Emanuel Macron or somebody else who is

more palatable. Maybe it's Pakistan. Why

more palatable. Maybe it's Pakistan. Why

not? plenty of people are interested in having this resolved and of course we don't know what's going to happen as as we sit here in in early April. Uh I do want just to underscore

April. Uh I do want just to underscore though just how high these rates are. I

mean you you write literally and I'm quoting exactly you say that books will be written about how profitable the shipping industry is right now and when it comes to tankers.

Yeah. Yeah. And also there has been so much written and uh talked about when it comes to the living memories of those who lived through last cycle that I

think that even though we had a great period of profitability during 2022 to 24, there was a feeling that maybe the cycle was over that a lot of ship owners had

made a lot of profits which they had rotated into orders of new ships. the

delivery of no those new ships would kind of handicap excess profits for the remainder of this cycle. So, you know, I used to joke and

cycle. So, you know, I used to joke and say, "I'll see you in 2045 for the next cycle."

cycle." Uh, but it turns out that the cycle is not over. And it turns out that if you

not over. And it turns out that if you have studied previous cycles, they're not just outsized profits for five years at a time. They are very messy. And if

you go back and you look at the stock price of Frontline from that 2003 to 2008 period, there are some massive draw downs

like over 80% draw downs and then back all the way up. So, uh, yeah, I think this is this is going to be an unusual cycle and books will be written about it because there are more people involved and

because we have better data and we're tracking it more carefully and more granularly, but also because everything which has happened in shipping since those Costco sanctions in 2019, but

maybe that maybe the cycle would be considered to have started with COVID is really part of this historic

rolling sequence of historic events which have all led to outsized shipping profitability in different sectors. LG

carriers, containers, dry bulk tankers, LPG carriers, offshore vessels, you name it.

How often do you write a piece for your Substack subscribers and what is your latest piece that's going to come out soon?

I tend to write about twice a week, although sometimes it's more. Uh there's

also a chat feature which is like more kind of like a morning note which I did today because when things are moving really quickly I mean it does take time not just to gather the information but

also to um you want to make sure that it's up to date and if things are changing too quickly it's very tricky to do in-depth articles. It's also very distracting because for example that

news today about the VCC's belonging to Oman and the LG carrier going through I was in the middle of writing an article when I got the news I started you know I just stopped everything I had to do it and for the past month more often than

not I I find myself stopping everything to do something. Uh the next article is going to be very interesting in terms of iron ore

inventories and that has to do with studying the evolution of iron or markets in China in

the last 25 years and before that.

The reason is this hopefully without giving too much away.

Ironor is really the driver of the largest vessel size for iron or markets which is the Cape size or Newcastle max.

And these are basically huge cargos of rocks which are being moved from Brazil and West Africa in Australia to China.

And China seems to have unlimited demand for these rocks which are then refined into steel using

metallurgical coal in furnaces. And it's

just extraordinary the amount that they import. And I like to go back and read

import. And I like to go back and read analysts estimates for how much they're going to be importing next year. And

every year analysts say that this was the peak. And every year, Chinese

the peak. And every year, Chinese government officials say, "We need to rationalize steel over capacity in this country. We're making too much." And

country. We're making too much." And

every year they make more. And every

year they export more. And it's like clockwork. So to understand this, I went

clockwork. So to understand this, I went back and I started researching about the iron or market.

And it turned out that the way this whole thing started is that iron ore was exported from Australia to Japan. Of

course, Japan had that kind of industrial miracle in the 60s, 707s, 80s and then China was kind of close behind and because of Chinese demand, the

contracts for iron ore were no longer negotiated on 10-year contracts, but rather on one year and then it became a monthly and then it become a weekly and then it became an index, a floating

index. And the fascinating thing that

index. And the fascinating thing that happened once it was a floating index is then banks got really interesting because once you had a mark tomarket of

your iron ore cargo that created trading liquidity and this was at a time when getting access to credit in China was very difficult.

So what happens in 2007? There was a reform which said that you could use movable objects or commodities like cargos as collateral.

What did traders do? They got letters of credit for a bank for 20% on the do on the yuan to go out and buy an iron or cargo. They moved the cargo to a bonded

cargo. They moved the cargo to a bonded warehouse.

The the cargo never made it to the mainland. They didn't pay taxes before

mainland. They didn't pay taxes before selling the cargo.

They used the cargo as collateral to take out another loan.

So it became this liquidity machine or they would sell the cargo but because the bank didn't want the money before 180 days they would invested in short-term paper or they would lend it

to somebody at extortionate rates like 12% for a few months. So these guys were rolling US dollars because iron ore is priced in dollars

and all of that was made possible by iron ore becoming indexed. So you could mark you knew what the cargo was worth and then from time to time the iron ore

price might crash. the banks would come calling, you know, whatever was a 20% collateral all of a sudden became 10%

because the value went down and so forth and so on. And I love this statistic. At

the highest, 40% of iron or cargos were part of this scheme to recycle dollars.

So you have all these guys trying to, you know, tearing their hair out trying to understand the iron or market and they're saying, "Wow, they're importing so much iron ore. I guess we can expect a lot of steel and sometimes the iron or

imports would go up and the steel export or steel production would go down and people like what what's going on? Why is

this? So this is the kind of reason why you need to understand the background of these markets so that just because someone's building inventory doesn't

mean they want to do more with it. Some

of these inventories can be sold up to 10 times before they are taxed. So these are just piles of rocks sitting in a Chinese port

which are basically collateral liquidity and they did the same thing with copper cathodes.

So this kind of like liquidity Ponzi scheme you would think they would have done it with oil and with coal and but no it was

it was iron ore because it can sit outside without being damaged by the weather. It's still dirt. It still has

weather. It's still dirt. It still has the same iron cord content.

And uh this whole thing just researching this, it's you know, I'm just laughing the whole time I'm reading. I I just can't believe the way that these Chinese steel mills

and traders got around the system considering the constraints they were confronted with. It's just brilliant.

confronted with. It's just brilliant.

It's so typical of the way that commodities trades work. And I I love learning about it and then I love writing about it and getting other people excited. And then the next time

people excited. And then the next time they see a statistic about iron ore inventories rising, they take that with a little grain of salt. Maybe they don't say to themselves, "Oh, this is

worrisome. It means that in the future

worrisome. It means that in the future they won't import as much. Maybe it

means nothing." But now I know why. I

understand it.

Now you know, and now uh when I read this, when people read this, they will know, too. I think that's good example

know, too. I think that's good example of just how in the weeds you can go.

I'll be honest, some of them went went over my head. I'm going to have to listen to that again. But again, I want uh people to know that it's not just, you know, nerding out on this stuff. It

is like this stuff has investment implications and um that's really important. Ed, tell us why. So, you

important. Ed, tell us why. So, you

know, we we've got this discount running. People can get a 20% off if if

running. People can get a 20% off if if you're a listener and you click click the link um through the the middle of April and of course people can sub subscribe monthly and annually. Uh you

just raised your prices on a on an annual basis. Uh nevertheless, it still

annual basis. Uh nevertheless, it still remains the fact that obviously of course subscribing monthly is cheaper.

Uh one month is cheaper than one year, but the the ratio uh is quite somewhat uh that like you know annual is priced um as expensive as like three or four

months instead of 10 months. So it's

like a heavily incentivized to do annual and heavily disincentivized to do monthly. tell us why you structured it

monthly. tell us why you structured it that way and kind of how it is is a factor of the the type of subscribers that ultimately you're you're looking for.

The reason is because I know that this sector will periodically attract attention from people who don't know much about it and to want to subscribe for a month and maybe get access to the information and then leave. And you

know, I totally respect that. However,

in particular when it comes to the private Twitter, I invest a ton of effort in sharing things on a daily basis. And so therefore, it really is a

basis. And so therefore, it really is a commitment in terms of educating my readers and wanting them to understand over time. You know, it's really like as

over time. You know, it's really like as if I was teaching somebody in many lessons per day. And I think that yeah, it's like a relationship. So therefore,

broadly speaking, I do prefer to have long-term readers. And it's not to say

long-term readers. And it's not to say that their allocation to shipping will necessarily always be high, but it means that they can tap into the knowledge base when something is happening and

have a little bit of a context to use uh to understand it because they have enough background. So, you know, I would

enough background. So, you know, I would say that who it's for, it's for people who who want to make sure they have access to the best information possible,

the best data, who want to be ahead of the curve, who don't want to be people watching the stocks move higher without understanding why and then being the last person to buy before it dips. You

know, that's always the danger. I mean

to be frank a lot of shipping owners invest in stocks because they are so well informed you know so it's going to be difficult for investors to compete with that level of of inside knowledge

in terms of what's happening in the market because those people are living and breathing those physical markets however you can be a little bit closer

and I would say that in addition to my uh analysis and my research really What I bring to the table is that

I am absolutely focused on this. In

other words, if you have a book which is six different sectors or eight different sectors or which I think is probably smart for most people terms of some

diversification, shipping is very particular and it's hard to know what's important and what's not. And so in a way what you're really

not. And so in a way what you're really doing is you're delegating that task of full-time focus and attention to me. And

that's also why you know I my goal is not to make this subscription cheap but I am an extremely dedicated and focused individual and I have built a network of

contacts and you know I take this very seriously and so therefore I think that somebody who is subscriber um they can feel comfortable knowing

that they're not going to miss something important because I will flag it and I will write about it and I will explain it and so therefore It's kind of like you can sleep better at night holding a

shipping stop which otherwise might be you might feel a little bit risky about it whereas with someone I'm basically on

call watching and monitoring and even in the times when I'm let's say not in front of my computer if anything of import happens I get five

messages within minutes because everyone from all over is just telling me. So

it's I think that that is really what the subscription is about.

Some people might not even read all of the articles. Maybe they're interested

the articles. Maybe they're interested in some sectors and others, but yeah, it gives you a window into that world and an authentic one by someone who works very hard at, you know, trying to understand for what it is,

right? And so I'm glad that we uh let

right? And so I'm glad that we uh let let you know let people know that if they notice the the differential of the monthly prices versus the annual pricing, that's because you want long-term subscribers. And if you're

long-term subscribers. And if you're just, you know, a tourist, I'm a tourist, but nothing wrong with that.

But if if you're a tourist and you just want to check out the monthly price, see if you like it, like of course that's allowed and you are welcoming them, but they have to pay up. Likewise, if you are a longerterm subscriber, you really

value that and people can, you know, that heavily uh incentivized to do that relative to a monthly price. I've never

read admittedly like a bank research note on shipping, but there's no way that they're as good as as your research. I mean, there's just no way.

research. I mean, there's just no way.

your your stuff is really good and I I want to be clear to my audience what I'm kind of underwriting you know with with my reputation of like you know neither you or I are promising the shipping market is going to be in a permanent bull market in terms of beta in terms of

alpha you know I definitely think personally in my belief that you have tons of alpha whether people subscribing to it whether they're hedge funds or individual investors can successfully implement that alpha you know I'm not I'm not promising that at all what I am

underwriting is that like I think your work is extremely high quality so um again if people are interested they can uh click the link in the description And actually, I think it kind of does roll off the tongue. The link is um

edfinn.substack.com/monetary.

edfinn.substack.com/monetary.

That's edfinn.substack.com/monetary.

And remember, once you click the link, you have to enter your email. If you

don't enter your email, it won't take you to the discount page. Ed, thank you again. Talk soon.

again. Talk soon.

Thanks, John.

Thank you. Just close the door.