Ocean Shipping stocks are not “buy and hold” investments. Shipping is a highly cyclical industry; Stocks require market timing. Non-insiders who hold shipping stocks for the long term are typically either “buy and wait” investors waiting for a cyclical boom to get paid or “bag holders” who have Didn’t sell when the cycle closed and are sitting on their losses.
How have shipping stocks performed so far this year, and how have they fared over the long term?
FreightWaves compared the price changes for a selection of shipping stocks to a common buy-and-hold option: the SPDR S&P 500 ETF (NYSE: SPY), a major exchange-traded fund that is a proxy for the broad stock market.
Using data from CoyFin (which adjusts prices for dividend payments) price changes were tracked year-to-date (YTD) across various shipping sectors and over the past four years, a time frame that pre-COVID Compares stock levels with current levels.
The comparisons show that many shipping stocks have outperformed the SPY in both the short and long terms.
container shipping stock
The pattern for many shipping equities this year has been: up in January and February, down in March-June, then divergence this summer, some booming and some not.
Container shipping stocks have done surprisingly well given the gloomy outlook for the sector. The stock of specialty marine carrier Matson (NYSE:MATX) topped the sector’s rankings. Matson shares have been rallying since April and have more than doubled the SPY. Matson’s was up 41% as of Thursday’s close, compared to SPY’s 18% YTD increase.
Container-ship lessor Danaos Corp (NYSE:DAC) also outperformed the broad market indicator by 27%.
Change in adjusted closing price, adjusted for dividends. (All charts: Coyfin)
At the low end of the spectrum are ocean carriers Maersk (Copenhagen: MAERSKB) and Zim (NYSE: ZIM), which are down 20% and 30% YTD, respectively, adjusted for dividends. These stocks started their decline in March this year and have not recovered since, underperforming the SPY.
Most container shipping stocks still top the S&P 500 ETF on a four-year basis, despite the fact that the market peaked last year after the effects of the pandemic subsided. According to Coyfin data, Danos is up 832% since August 2019. The shares owned by the company’s sponsor, John Costas, are currently worth $604 million.
Tanker stocks regained some of their forward momentum this summer, surging in July and the first half of August, then giving back a portion of their gains late last month.
Overseas Shipping Group (NYSE:OSG) — which leads the pack — hasn’t followed the typical tanker-stock price pattern. Its shares have risen steadily throughout the year; That’s up 52% YTD. OSG focuses on the Jones ACT (US Coastal) business, which is a completely different market than the other listed tanker names.
Other tanker stocks that have beaten the SPY — Frontline (NYSE: FRO), TK Tankers (NYSE: TNK), and Nordic American Tankers (NYSE: NAT) — are up 45%, 32%, and 28% YTD, respectively. All three have investments in the medium-sized crude-tanker sector.
Many tanker stocks have underperformed SPY in 2023. Product tanker stocks are at low levels. The adjusted share price of Scorpio Tankers (NYSE:STNG) was down 6% YTD as of Thursday, Edmore Shipping (NYSE:ASC) was down 14%.
Taking a longer-term view, all of the top tanker names have outperformed the S&P 500 ETF on a four-year basis.
Tanker equities underperformed the broader stock market from the second half of 2020 to the first half of 2022 as a result of the fall in COVID demand, but have recovered lost ground since then.
According to Coyfin data, the adjusted price of Tekay Tanker has increased by 358% since the end of August 2019.
gas shipping stock
Gas shipping stocks fall into two groups: shares of owners of specialty tankers carrying pressurized liquefied petroleum gas (LPG) – propane and butane – and shares of owners of specialty tankers carrying supercooled liquefied natural gas (LNG).
LPG shipping stocks have been star performers in both the short and long term, led by companies that own very large gas carriers (VLGCs), which are ships that serve high-volume, long-distance LPG trades. Panama Canal congestion is now increasing VLGC, creating supply-side inefficiencies that support spot rates.
Avans Gas’s (Oslo: AGAS) adjusted share price was up 79% YTD as of Thursday, more than four times SPY’s gain. Shares of BW LPG (Oslo: BWLG) were up 70% and Dorian LPG (NYSE: LPG) were up 36%.
Most of the previously listed LNG carrier owners have been taken private. One of the remaining net LNG carrier owners is Flex LNG (NYSE: FLNG). The other is Coolco, which was not included in the survey due to the recentness of its listing. Flex LNG stock has been relatively flat this year, down 7% as of Thursday.
Looking at gas-shipping stock performance over a four-year time frame, Flex LNG is second best to Avance. Gas carrier stocks have outperformed broad stock-market benchmarks three to four times since late August 2019, with the exception of Navigator Gas (NYSE:NVGS), which specializes in smaller LPG carriers and roughly equals SPY. Used to be.
dry bulk stock
Dry bulk stock has lagged behind the public shipping markets this year.
Dry bulk shipping rates take a toll on the Chinese economy. The news from China continues to get worse. Listed dry bulk stocks have been falling since March – and they are still falling.
According to Coyfin data, the adjusted share price of Golden Ocean (NASDAQ:GOGL) declined the most, 16% YTD. Eagle Bulk (NYSE: EGLE) is down 12%, Genco Shipping & Trading (NYSE: GNK) is down 11%, and Star Bulk (NYSE: SBLK) is down 9%.
The long term chart for Dry Bulk stocks highlights the importance of market timing.
Port restrictions in China congested dry bulk shipping capacity during the pandemic, pushing up rates. There was a huge jump in dry bulk stocks between early 2021 and mid-2022. However, most dry bulk names are now underperforming the SPY on a four-year basis, as a result of the decline in the second half of last year and 2023 YTD.
Looking for even longer term
The fact that many shipping stocks outperformed broad stock-market measurements between late August 2019 and Thursday doesn’t mean they’re buy and hold investment material. It’s just about where the different shipping segments were in their respective cycles four years ago and where they are today.
Looking longer, over a 10-year time horizon, SPY has risen nearly twice as fast as all shipping stocks.
There are two outliers: BW LPG’s adjusted share price is up 162% over the past 10 years, which roughly matches SPY’s gain of 175%. And Matson’s adjusted price is up 225% since the end of August 2013, making it the only shipping stock to outperform the SPDR S&P 500 Index ETF over a one-decade period.
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