Shipping ETF: End of the Pier for SEA

| About: Guggenheim Shipping (SEA)

I originally recommended the Claymore/Delta Global Shipping Index ETF (NYSE: SEA) on November 23, 2009 (IWB #2942) at US$13.63. It was liquidated on May 10 at a final NAV of US$15.71.

Claymore Securities (the U.S. parent of the Canadian operation) shut down this shipping exchange-traded fund on May 10 after failing to obtain unitholder approval for a new advisory agreement. In making the announcement, the company said it believes there is still "significant interest" among investors for this type of ETF. As a result, the company has filed a registration statement for a successor product to be known as Claymore Shipping ETF. The plan is to have it track the same index and trade under the same ticker symbol (SEA). However, the exact timing of the launch of the successor ETF is not yet known.

The final net asset value of the old fund was $15.7147 per unit. This is being paid out to shareholders as cash so we have a gain of slightly more than 15% based on the original recommended price. Canadian investors will have some of that money withheld at source but this can be claimed as a foreign tax credit as long as the units are not in a registered account.

This is an unfortunate and unexpected development. However, there are other good shipping stocks on my current buy list such as Knightsbridge Tankers (VLCCF) which is up more than 40% since my last update in November.

Action now: SEA has been terminated. Make sure your account has been credited with the cash payment.

Disclosure: No position