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Shipping stocks as represented by the Guggenheim Shipping ETF (NYSEARCA:SEA) have been strong this year, up almost 20% year to date and trading near eight-month highs. The shipping group includes dry bulk shippers such as Dryships Inc. (DRYS) and Freeseas Inc. (FREE), that transport bulk cargo items such as ore or food staples; oil tankers such as Frontline Ltd (FRO), Newlead Holdings Ltd. (NEWL), and Top Ships Inc. (TOPS), that transport crude oil, petroleum products, liquefied petroleum gas and chemicals; containership shipping companies such as Alexander & Baldwin Inc. (ALEX) that carry their entire load in truck-size containers; and shipping logistics companies such as Sino-Global Shipping America, Ltd. (SINO).

In this article, via an analysis based on the latest available Q4 institutional 13-F filings, we identify the shipping companies that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets. Taken together these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are bullish on the shipping group, adding $62 million in Q4 to their $4.12 billion prior quarter position (for more general information on these mega funds, please look at the end of the article).

The following are high-dividend yield shipping companies that these mega fund managers are most bullish about, and that are also up strongly and trading near recent and/or multi-year highs:

Teekay LNG Partners LP (TGP): TGP is a Marshall Islands partnership that provides international marine transportation services for LNG and crude oil. Mega funds together added a net $35 million in Q4 to their $307 million prior quarter position in the company, and taken together mega funds hold 15.1% of the outstanding shares. The top buyer was Neuberger Berman Group ($14 million), also the top holder at $119 million.

TGP shares have been strong, up over 15% YTD, and currently in a tight consolidation pattern near all-time highs for the last six-plus weeks. The stock sports an out-sized 6.6% dividend yield, far above the 1.0% average for its peers in the shipping group, and its shares trade at a current 21.0 P/E (on a TTM basis) and 2.2 P/B compared with the averages of 9.1 and 0.5 for its peers in the shipping group.

Teekay Offshore Partners (TOO): TOO is a provider of marine transportation, oil production, and storage services to the offshore oil industry. Mega funds together added a net $34 million in Q4 to their $297 million prior quarter position in the company, and taken together mega funds hold 17.9% of the outstanding shares. The top buyers were Bank of America ($15 million) and Neuberger Berman Group ($15 million), and the holder was Neuberger Berman Group ($148 million).

TOO shares are up almost 10% YTD, and currently trade in a tight consolidation pattern near its 52-week highs for the last 10 weeks. The stock sports an out-sized 6.9% dividend yield, far above the 1.0% average for its peers in the shipping group, and its shares trade at a current 17.5 P/E and 4.6 P/B compared with the averages of 9.1 and 0.5 for its peers in 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 together added a net $13 million in Q4 to their $60 million prior quarter position in the company, and taken together mega funds hold 6.8% of the outstanding shares. The top buyer was Ameriprise Financial ($5 million), and the top holders were Blackrock Institutional Trust Co. ($15 million), Northern Trust Corp. ($14 million), and State Street Corp. ($13 million).

SFL has a high 10.1% dividend yield, and it trades near recent highs, up about 60% from the lows in December of last year. Its shares currently trade at a current 8.3 P/E and 1.2 P/B compared with averages of 9.1 and 0.5 for its peers in the shipping group.

The following are some additional shipping stocks that mega funds accumulated in Q4 (see Table):

  • Kirby Corp. (KEX), engaged in inland and offshore marine transportation, and the overhaul and repair of diesel engines and related parts, in which mega funds together added a net $46 million in Q4 to their $1.13 billion prior quarter position in the company;
  • Golar LNG Ltd. (GLNG), that provides international marine transportation services for liquefied natural gas with a fleet of 12 vessels, in which mega funds together added a net $23 million in Q4 to their $122 million prior quarter position in the company;
  • Genco Shipping & Trading (GNK), a provider of international tanker transportation services for iron ore, coal, grain and steel with a fleet of 49 vessels, in which mega funds together added a net $2 million in Q4 to their $25 million prior quarter position in the company; and
  • Excel Maritime Carriers (EXM), a provider of international tanker transportation services via a fleet of 47 dry-bulk carriers for dry bulk cargo such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products, in which mega funds together added a net $1 million in Q4 to their $5 million prior quarter position in the company.

Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following shipping stocks (see Table):

  • Teekay Corporation (TK), that provides international crude oil and petroleum product transportation services with a current fleet of 150 vessels, in which mega funds together cut a net $54 million in Q4 from their $593 million prior quarter position in the company;
  • Frontline Ltd , that provides tanker transportation services of oil and oil products through a fleet of 73 vessels, in which mega funds together cut a net $23 million in Q4 from their $62 million prior quarter position in the company;
  • Nordic American Tanker Ltd. (NAT), that provides crude oil transportation services through bareboat, time, and spot charters with a current fleet of 19 vessels, in which mega funds together cut a net $17 million in Q4 from their $133 million prior quarter position in the company;
  • DryShips Inc. , a Greek provider of carrier transportation services with a fleet of 38 dry-bulk carriers and 12 tankers, in which mega funds together cut a net $10 million in Q4 from their $131 million prior quarter position in the company;
  • Knightsbridge Tankers (VLCCF), an international tanker company whose primary business activity is international seaborne transportation of crude oil, in which mega funds together cut a net $6 million in Q4 from their $7 million prior quarter position in the company; and
  • Navios Maritime Holdings (NM), that provides seaborne shipping and logistics services for dry bulk cargo, in which mega funds together cut a net $5 million in Q4 from their $38 million prior quarter position in the company.

(Click chart to enlarge)

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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 High-Yield Shipping Stocks Being Snapped Up By Mega Funds; 6 Being Sold