Gregorian

The Crude Oil Contango Trade Drives Up Tanker Rates

Well, that can't be a lasting situation. When short and medium term oil contracts are more balanced in a couple of months, this extra demand will vanish.

What could be hoped for however, is a speedup of demolishing/rebuilding single-hull vessels. And a stop in newbuilding orders (Who would lend to that in todyas climate?), but that will take some time to seep through..

Will All Shipping Companies Suffer Equally?

Interesting discussion going on here. I just feel that all you enlightened writers are missing out on something very important when it comes to Frontline and Ship Finance; the main owner of these companies.

His name is John Fredriksen, and is regarded a big celebrity in Norway (a bit like W. Buffett in US). I won't give you the whole story here, but through his Hemen Holding company, he's having de facto control over these companies. It seems like SFL has been given the role of a "bank", while Fro is more like a high-risk player in the tank market.

Many of you seem concerned about the high leverage in these companies. But this has always been Mr. Fredriksens game. He's draining the companies of dividends, BUT at the same time he keeps a (huge) pile of cash ready in case there's a market downturn (and there is one now...right?). Just look at the capital injection in Frontline earlier this year. He's been doing this many times before. He would not let any of his companies go bankrupt, and he has the means to avoid it, too.

So I'd like to make clear that the inherent risk in investing in these shares is much lower than it seems. That includes Fredriksens other companies, such as Seadrill (SDRL) and Golden Ocean (GOGL), but I don't know if these are listed in the US.

"It's always darkest right before sunrise" (bad quotation, hopefully meaning clear..?), nowhere in the investing world is this more true than here. People who'd invest alongside Fredriksen could make 1000% profit, given optimal timing. I know, cause I missed out on it a couple of times already...