It has been two weeks since we departed for the 16th Annual Capital Link New York Maritime Forum. The trip was a success on many levels. We listened to interesting panels and met management teams. We saw old friends and made new ones. We saw a panoply of styles that represent the full range of investor positioning. Best of all, we came away with new ideas.
There is no one style that works consistently when investing in shipping. There are those that trade on expected quarterly earnings versus forecasts. Given recent reductions by Pareto, Stifel, and Jefferies, a short-term investor would have done well to short many names. On the other hand, we tend to buy and hold. We’re not looking for good news getting better or bad news getting worse as much as we are focused on asymmetry. We want the risk/reward to be 3:1, such as 30% to 50% up compared to 10% to 15% down. Many times, we position in a segment that has been beaten up. As a generalist, we look at returns of other assets, not whether shipping equities are cheap or expensive compared to last year. Shipping debt and equity still screen cheap compared to most everything on offer globally.
New York in October is delightful, and we enjoyed being in Manhattan. There are those talking heads on CNBC who have constantly cited the coming recession for the last two years, which we continue to ignore. Torsten Slok, Apollo’s chief economist wrote on October 26th, “The US consumer is not slowing down. Visits to the Statue of Liberty continue at 2023 levels. Consumer spending remains healthy with air travel strong, hotel spending robust, and Broadway show attendance solid.” We came away from our trip feeling good about Manhattan’s economy too, reminded of the late Yogi Berra’s famous insight, “No one goes there, it’s too crowded!”
