Scorpio Tankers owns a large fleet of product tankers. They just completed a merger, and management is aggressively betting that product rates will rise in the 4th quarter this year. From their 2Q transcripts:
"we remain optimistic on the product tanker market outlook with fundamental drivers of our market that will remain largely unchanged. We expected demand growth actually to overtake supply growth in the second half of this year and this is happening with demand setting itself around the 4% mark supply being between 1% and 2% going forward....being already in positive territory makes us believe that it shouldn't take us too long."
At current rates, their operating cashflow is neutral to mildly-positive - rates need to raise in about 9-12 months, or else this company has to raise money from the market. This stock is like a 1-year call option on product tanker rates. It may go to zero, or go up several times if product tanker rates improve.
Bought STNG yesterday, 785 shares at USD 3.70, total cost USD 2901.29. Its 0.5% of my portfolio.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment