Originally published in the Against All Odds Research April 2022 Issue.
I've been talking about the different segments of shipping for a while now and put out an earnings based trade on Zim Integrated Shipping (ZIM) ahead of Q3 2021 results. That expanded into a full allocation to the whole sub-sector: we now own ZIM, DAC, GSL and the newest addition is MPC Container Ships (Oslo:MPCC). I also like Matson (MATX) and Costamare (CMRE). I'm watching two stocks in the container leasing space - Triton International (TRTN) and Textainer Group Holdings (TGH). The container leasing sub-segment is benefiting from high lease rates and increase in residual values, similar to the containership lessors, and the stocks are in strong long-term uptrends. I have a full allocation to containerships already, and I'm looking to add more exposure to other parts of shipping, so I'll not be following these stocks closely.
On 4/4, the shipping sector had a massive sell-off, ostensibly due to the passage of the Ocean Shipping Reform Act. My read is that the sell-off is wrong-headed. I'm a price action trader in general, but there are exceptions, and this situation is one such exception. I simply don't buy the premise that the US government can dictate terms to international vessel owners, much less demand lower freight costs and force unwanted cargo on vessel owners. The bill is unlikely to become law, and if it does, it's going to hurt US retailers a whole lot more than it hurts the containership sector.
Buy the dip.