NOTOS NEWS | MARITIME INDICES NOVEMBER 2019

TANKER STOCKS UNIMPRESSED
We are a bit surprised by the lukewarm moves of the tanker stocks. Charter rates for VLCCs are back above USD/day 100k and IMO 2020 inefficiencies are kicking in but the tanker stock prices hesitate to move upwards. Perhaps investors already ‘smell’ the underlying fundamentals of this sector: strong fleet growth and subdued tonne-mile demand.

EXTENDED BLACK FRIDAY FOR LNG STOCKS
Sometimes shipping sectors are traded at incredibly low valuations. A negative sentiment, strong fleet growth, and low charter rates form the ideal background for valuation gaps. Last year we had a similar pattern in the LPG market when companies like Avance Gas traded 50% below NAV. Long-term value investors may have a closer look at the LNG sector.

BW Group just recently announced to have bought a 1% stake in listed rival Flex LNG. The Singaporians recently struck good deals with a couple of other occasions (Dorian, DHT, Epic).

BULKER COMPANIES AIMLESS 
“Shall I stay or shall I go?” Bulker companies have been quite volatile this year. Firstly weak due to the Vale dam disaster, followed by a strong recovery in the second half of the year. Overall, our bulker sector index unveils that investors were not overly rewarded this year. And the underlying issues like too many vessels in the fleet remain. We are not really convinced and would buy only for short-term trading but not for long-term investing. 

LINERS REACH NEW HIGHS
The green line in the graph below shows the performance of our liner index. However, this good performance comes at a price: Company valuations have reached very high levels. The average P/E ratio already exceeds the P/E ratio of the broad stock markets like the S&P 500.

SENTIMENT FOR BROAD SHIPPING MARKETS STILL SIGNALS “GO”
The Notos Maritime Sentiment climbed to 0.5 index points recently, the highest level for more than a year. It signals to stay invested.

The Notos (Crude) Tanker Sentiment reached this level already some weeks earlier. However, the Notos Bulker Sentiment hovers around the zero-line for more than a month.

ALL TRADING STRATEGIES GAINED IN NOVEMBER
In November all three trading strategies delivered positive returns, outperforming the Dow Jones Global Shipping Index by 1.8% (NMSI), 3.6% (BASE) and 5.7% (CALIMA). 

We are in the process of aligning our trading strategies into one combined strategy. From January 2020 on, we will concentrate our strategies on the ‘Notos Maritime Strategy Index’ which will combine its successful factor strategy with the more discretionary approach from ‘Calima’ and the governance approach from the ‘Base Portfolio’. We will also utilize our ‘Sentiment Indices’ for trading purposes.

Please do not hesitate to contact us if you wish to learn more about our trading strategies.
 

GLOSSARY
NOTOS SHIPPING INDICES | Measure the average performance of listed shipping companies in each sector
NOTOS MARITIME SENTIMENT INDEX | Measures the sentiment of global shipping markets, ranks between -1 and +1
CALIMA | Closed-end maritime investment fund (AIF)
NOTOS MARITIME STRATEGY INDEX | Discretionary trading-strategy on shipping risks
BASE PORTFOLIO 2019 | Portfolio consisting of one selected ‘Quality Stock’ for each sector