Tankers: Storing Value

Focus: STOCKS

Igor Greenwald Image Igor Greenwald Chief Investment Strategist, MLP Profits

We began adding tanker stocks to our aggressive portfolio some seven months ago; as predicted, charter rates have continued to increase, driven by increased offshore storage and shipping demand, asserts Igor Greenwald, energy sector expert and editor of MLP Profits.

Low energy prices and new trade routes have soaked up much of the spare capacity in this long-depressed industry. Low fuel costs have also produced considerable operating cost savings for ship owners.

As a result, many of the tanker stocks have powered ahead and we’re now adding two more picks to our growing tanker flotilla.  

Both have timed this market resurgence just right with discounted acquisitions and a high degree of exposure to rising spot rates.

EuroNav (EURN)

EuroNav is among the leading crude tanker operators worldwide with 27 VLCCs, 23 Suezmaxes, one V-Plus super-super-tanker, and two FSOs (tankers turned into floating storage platforms).

The company is headquartered in Belgium and staffed by Europeans; its tankers steam under the Belgian, French, and Greek flags.

Previously listed on Euronext, EuroNav staged a successful New York public offering in January, using the proceeds for the well-timed acquisition a year earlier of 15 VLCCs, at a bargain price of $980 million.

Last month it swooped in again to buy four brand new VLCCs set to be launched from shipyards in the near term, with options on four more.

Other things to like about EuroNav are its scale, participation in a top VLCC chartering pool, and the fact that fleet management and operations are not subcontracted to a separate affiliate of the sponsor.

The stock has rallied more than 30% in less than six months since its New York IPO, but has much further to go.