I enjoy reading TradeWinds News. It is both informative and a good read for someone who is interested in shipping. On the other hand, if you look at some of the predictions of trade organization economists or other experts in their pages, you would never buy a dry bulk shipping stock. In the last month, you would have also left money on the table.
For one month as of 6/29, SBLK was up 31% while FB was down 4.31%. Yet where is the TradeWinds News headline, “Star Bulk blows away Facebook in June?” On May 6th, I could have bought Facebook stock at $208.47 and sold it at the close on Friday, June 26th at $216.38, for a gain of 3.7%. Instead, I purchased Star Bulk Carrier (“SBLK”) shares at $4.80 that day and sold them 37.5% higher at $6.51. The difference: SBLK was trading on May 6th below liquidation value with attractive risk/reward. In addition, I got excellent management and exceptional corporate governance.
Part of it was luck and part of it was experience. If I had known the rise was going to definitely occur, I would have bought more. I continue to own SBLK and other dry bulk exposure as of 6-29-20, because the risk/reward is still attractive. No one knows what will happen in six months – quite frankly one week is tough enough. The outlook for the segment is favorable. Credit for all but the largest ship owners is expensive restraining new ordering, and the conundrum – what will be the useful life of an engine beyond 2030 – has yet to be solved. The advantage of being an investor over a ship owner is that I can easily change my mind and exit if the facts change. As to those who are always negative about dry bulk shipping’s prospects, remember that while a broken watch is always right 2x per day, it doesn’t tell accurate time for the remainder.
