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In this article we conduct an analysis (based on the latest available Q3 institutional 13-F filings) of the investing activities of the world largest fund managers managing between $100 billion and over a trillion dollars. We identify the shipping companies that are being accumulated and those being distributed by these mega managers. The list includes prominent managers such as Wellington Management ($1.6 trillion in total assets under management), Vanguard Group ($1.4 trillion), Fidelity Investments ($640 billion), T Rowe Price ($330 billion), and Goldman Sachs Asset Management ($580 billion), among others. The shipping group includes dry bulk shippers such as Dryships Inc. (DRYS) and Navios Maritime Holdings (NM) that transport bulk cargo items such as ore or food staples; oil tankers such as Frontline Ltd (FRO) and Ship Finance Intl Ltd. (SFL), that transport crude oil, petroleum products, liquefied petroleum gas and chemicals; and containership such as Alexander & Baldwin Inc. (ALEX) that carry their entire load in truck-size containers.

Based on our analysis, we determined that mega fund managers are bearish on the shipping group, and during the September quarter, these mega fund managers together cut a net $97 million from their $3.53 billion prior quarter position in the group, selling $294 million and buying $197 million worth of stocks in the group. Furthermore, overall they are under-weight in the group by a factor of 0.5; that is taken together mega funds have invested 0.1% of their capital in the internet content group compared to the 0.2% weighting of the group in the overall market.

The following are shipping companies that are trading near their lows that were bought by mega fund managers in Q3:

Nordic American Tanker Ltd. (NAT): Nordic American provides crude oil transportation services through bareboat, time, and spot charters with a current fleet of 19 vessels. Its shares are down 54% for the year and trading within 2% of nine-year lows. Mega funds added a net $16 million in Q3 to their $103 million prior quarter position. Ttaken together, mega funds hold 21.0% of the outstanding shares, significantly more than their 14.3% weighting in the group. The top mega fund buyer in Q3 was Wellington Capital Management ($16 million). Overall, 121 institutions hold 33.1% of Nordic American shares, with Wellington ($48 million) being by far the top holder with 8.6% of the outstanding shares. Nordic American, like many other crude oil shipping companies, is a high-dividend stock yielding 9.6%, and it currently generates losses, and it trades at 0.6 P/B compared to the average of 1.2 for the shipping group.

Scorpio Tankers Inc. (STNG): Scorpio provides seaborne transportation services for crude oil and petroleum products with a fleet of ten vessels. Its shares are down 48% for the year and trading within 10% of all-time lows. Mega funds added a net $5 million in Q3 to their $31 million prior quarter position. Taken together mega funds hold 21.6% of the outstanding shares, more than their 14.3% weighting in the group. The top mega fund buyer in Q3 was Wellington Capital Management ($5 million). Overall, 70 institutions hold 81.8% of Scorpio shares, with Wellington ($24 million) and Steelhead Partners ($22 million) being the top holders with 13.8% and 12.9% of the outstanding shares respectively. Scorpio currently generates losses, and it trades at 0.5 P/B compared to the average of 1.2 for the shipping group.

DryShips Inc. (DRYS): DryShips is a Greek provider of carrier transportation services with a fleet of 38 dry-bulk carriers and 12 tankers. Its shares are down 56% for the year and trading within 15% of all-time lows, in concert with the collapse in dry bulk freight rates as represented by the Baltic Exchange Dry Index (BDI) that is trading down 60% from the highs set late last year and is down 85% from the highs in 2008. Mega funds, however added a net $1 million in Q3 to their $98 million prior quarter position. Taken together, mega funds hold 9.6% of the outstanding shares, less than their 14.3% weighting in the group. The top mega fund buyers in Q3 were Deutsche Bank ($19 million) and Morgan Stanley ($4 million). Overall, 160 institutions hold 19.2% of DRYS shares, with Deutsche Bank ($28 million) being the top holder with 7.0% of the outstanding shares. DryShips trades at a discount 4 forward P/E, and at 0.3 P/B and 2.3 P/CF, compared to averages of 76.4, 1.2 and 35.8 respectively for the shipping group.

The following are shipping companies that were sold by guru fund in Q3 (see Table):

Frontline Ltd (FRO): Frontline provides tanker transportation services of oil and oil products through a fleet of 73 vessels. Mega funds sold a net $4 million in Q3 from their $33 million prior quarter position. Taken together, they hold 12.2% of Frontline shares. The top seller was Wellington Capital Management ($3.5 million). FRO also trades near its lows, within 2% of its all-time lows, and is currently generating losses.

Navios Maritime Partners (NMM): Navios operates as an international owner and operator of 16 vessels capable of transporting dry bulk commodities. Mega funds sold a net $8 million in Q3 from their $65 million prior quarter position. Taken together, they hold 8.0% of NMM shares. The top sellers were Invesco Ltd. ($3.9 million), Credit Suisse ($2.2 million) and Deutsche Bank ($1.4 million). Navios is a high-dividend stock yielding 12.9%. Also, it trades at discount 11-12 forward P/E, and at 1.4 P/B and 7.0 P/CF, compared to averages of 76.4, 1.2 and 35.8 respectively for the shipping group.

Navios is a part of Navios Maritime Holdings (NM), a vertically integrated seaborne shipping company with a fleet of 57 vessels carrying dry bulk cargo. Mega funds position in NM was unchanged at $40 million for the quarter, including $1 million each bought and sold during Q3. The top mega fund holders in NM are Fidelity Investments ($27.4 million) and Morgan Stanley ($5.9 million). NM is also a high-dividend stock yielding 6.9%. It trades at a discount 5-6 P/E, and at 0.3 P/B and 3.6 P/CF, compared to averages of 76.4, 1.2 and 35.8 respectively for the shipping group.

Eagle Bulk Shipping Inc. (EGLE): Eagle is a provider of international tanker transportation charter services for dry bulk goods through a fleet of 38 vessels. It is the largest U.S. based owner of Handymax dry bulk vessels that range in size from 35,000 to 60,000 deadweight tons or dwt, and transport a broad range of major and minor bulk cargoes, including iron ore, coal, grain, cement and fertilizer, along worldwide shipping routes. Mega funds sold a net $2 million in Q3 from their $16 million prior quarter position. Taken together, they hold 17.2% of EGLE shares. The top seller was Deutsche Bank ($0.6 million). Eagle also trades near its lows, within 4% of its all-time lows, and is currently generating losses.

Alexander & Baldwin (ALEX): Alexander & Baldwin provides containership freight services in Hawaii, Guam, China and U.S. Pacific coast ports with 17 vessels. Mega funds sold a net $23 million in Q3 from their $346 million prior quarter position. Taken together, they hold 17.7% of Alexander & Baldwin shares. The top sellers were Blackrock ($11.6 million) and State Street Corp. ($4.9 million). Alexander & Baldwin yields a dividend of 3.3%. Also, it trades at discount 19 forward P/E, and at 1.4 P/B and 16.8 P/CF, compared to averages of 76.4, 1.2 and 35.8 respectively for the shipping group.

Ship Finance Intl Ltd. (SFL): Ship Finance provides tanker transportation services for crude and refined oil products, dry bulk and containerized cargoes. Mega funds sold a net $8 million in Q3 from their $66 million prior quarter position. Taken together, they hold 6.8% of SFL shares. The top sellers were NeubergerBerman Group ($5.1 million) and State Street Corp. ($2.6 million). Ship Finance is a high-dividend stock yielding 15.6%. Also, it trades at a discount 6 forward P/E, and at 0.9 P/B and 5.6 P/CF, compared to averages of 76.4, 1.2 and 35.8 respectively for the shipping group.

Table: (Click to enlarge)

This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: 3 Shipping Stocks Being Bought By Mega Fund Managers, 5 More Being Sold