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commoncents

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About commoncents

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  1. I’m definitely holding, but also realize that you can provide the thesis, but can’t provide conviction in said thesis to others. I personally think contango will appear again and spike rates. American shale will resume pumping once oil prices show signs of recovery, only exacerbating supply situation, but the incentive for the independents is to pump even at a loss bc they lose less vs not pumping at all. And once that happens, OPEC+ deal may be in jeopardy. Too much prisoners’ dilemma with too many participants with different agendas/survival at stake.
  2. Being a tanker holder is frustrating. I can understand why people would cut bait. That being said, I am holding (and may become a bag holder). After the $STNG call, I am bullish product tanker companies and $STNG in particular. They guided very well for Q2 and provided visibility into Q3. Prior to earnings, my position weights favored product vs. crude. Depending on how the $EURN and $FRO earnings go, I may continue that trend.
  3. I believe they have ten VLCC's that have been fixed for extended charters. I did some digging and it looks like 4 of them were contracted at $31,500/day with expirations in 2021/2022 and 6 were contracted in Q1 at $67,300/day for a year. The 6 charters at $67,300 are likely going to work out well, but if we compare DHT's Q1/Q2 to FRO and EURN, I suspect that it will underperform as FRO and EURN's CEO's have gone on the record that they prefer to be exposed to spot rates. Just different strategies of taking profits off the table vs. letting it ride.
  4. I think DHT is a solid hold.Their Q1 (and Q2 guidance) could have been even better if they didn't time charter a large portion of their fleet at ~$35K/day. I expect that EURN and FRO will outperform DHT in Q1 and Q2 guidance as they have more exposure to spot daily rates. Whether DHT's conservative approach pays off, remains to be seen when spot rates begin to soften in Q3 and beyond. I could be wrong, but I am of the belief that we will see contango return again. As long as there is oil surplus, contango needs to exist to store the excess oil. My uneducated guess is we see it return and spot rates will firm up and possibly run again.
  5. I'm interested to get more color on the open revenue days. It represents ~24% of the the days in Q2 and would significantly impact DHT's results. Uneducated guess is that it represents unbooked spot rates for the remainder of Q + any unutilized spot rate days QTD.
  6. DHT just announced Q1 earnings and 5% dividend of $0.35/share. Also guided for Q2 adjusted net revenue of $164.4M. To put that into perspective, 2020 YTD through Q2 would have adjusted net revenues of $316.9M vs. full year 2019 adjusted net revenues of $347.6M.
  7. I agree with everything you said here. At this point in the cycle, tanker price action is highly dependent on fluctuations in the WTI/Brent front month futures contracts. I listened to the $ASC (smaller product/chemical tanker) quarterly earnings call this morning, and the call was very bullish for the long term tanker trade. 1. Anticipates that 20% of entire world fleet will be used for storage. Estimates are that 8-10% are currently being used. 2. Credit for tankers is tight. It is the result of the current lending environment and the tanker industry. Moving forward, this means that there will be little to no credit for future shipbuilds which keeps the orderbook light, and ensures supply of tankers will continue to be constrained. This has historically been the downfall of the tanker industry, as when the going gets good, the tanker owners typically flood the market with supply which drives down rates. 3. The demand destruction will likely cause inefficient refineries near high demand locations to permanently shut down. This increases tonnage as product tankers will need to travel farther distances to transport the refined crude from the refineries to demand centers. 4. Management does not believe the floating storage component is going away any time soon. 5. Counterparty risk has not been an issue as of yet. Obtaining payment for demurrage has not been an issue. All in all, very bullish for the long term prospects of tankers. I am looking forward to the $DHT call after market close to get the crude side of everything, but my read is that the product tanker market will likely stand to benefit the most moving forward. Purchased more $STNG and $DSSI at the dip today. Currently holding in order of position size $STNG (largest product fleet), $DSSI (mix of product/crude); $TNK (mix of product/crude); $INSW (mix of product/crude); $EURN (crude); and $DHT (crude)
  8. Your theory is certainly plausible. I think that a lot of the weak hands were washed out in the latter half of last week. Many of the recreational investors got caught up in the NAT buying spree. Today's price action was promising as the tanker stocks seem to attract day traders/swing traders due to the volatility. They would gap up at the open and then the traders would sell off their positions and the prices would move down during the rest of the day. It looked to be the case when oil went positive, but there was support that pushed the prices higher. It is possible that people are buying before earnings and looking to sell on the pop. I'm hoping that the stock price jumps, algorithms which aren't following the daily spot rates/contango/etc. jump in, and the shorts get squeezed. It's unfortunate that DHT is leading off the tanker earnings as they have been conservative and have reduced their exposure to the spot market by accepting 12+ month time charters.
  9. I was also worried that great earnings and good guidance would lead to no price action. But today's jump in price was promising. The tanker sector has traded inverse to the price of oil for the past month or so, but oil jumped and the tankers weren't impacted. It's possible that people are trying to front run the algo's prior to earnings and/or there are theories floating out there that the Reddit subforum had a lot to do with the jump today. If that's the case, we may see more momentum in the tanker sector through earnings season *crossing fingers*
  10. Q1 should be better than Q4 2019 but I don't expect it to be a blowout. Much of the charters were already booked in 2019 and February was a soft month in the spot. Q2 guidance will be important for all of the tankers. It will help me decide which ones to trim and whether I'm going to sell some holdings into strength tomorrow or continue to hold.
  11. I own a basket of STNG/DSSI/EURN/DHT/INSW/TNK/FRO with some calls on NAT. I've been moving my basket to a heavier weighting to product tankers from crude tankers. Here's a snapshot of the current spot rates. Spot rates The LR2 rates are higher than the VLCC rates! And the LR1 rates aren't far behind. Pretty much unheard of. Of the TANKERZ in my basket, STNG, DSSI and TNK have exposure to product tankers.
  12. Canadian government is providing credit to its oil companies. Looks like the US is also looking to provide loans to "small oil producers". Something to keep an eye on if looking to jump into Canadian oil plays. I'm currently holding small positions in $SU and $CVE. Natural gas players that I invested in were $SD (Kuppy position), $AR, and $RRC. Took some off the table after the recent run up.
  13. On the money. Tankers are inherently very volatile holdings throughout the trading day. Need an iron stomach especially as it trades. From my vantage point, oil action is likely due to Trump's hawkish comments re: Iran which have pushed up oil prices, that reduced the contango trade a bit. However, when WTI physical barrels are due for pickup in a month, actual physical supply constraints will likely drive down the June WTI price unless supply meets demand. Bearish case against tankers right now - conflict in the Middle East and/or counterparty risk where the refineries/oil traders are unable to pay our TANKERZ. During the dip, I added to $STNG and $DSSI which are exposed to the clean tanker market. Huge boat constraints which is placing refineries in a bind. Oil glut
  14. When I first started investing, I read The Intelligent Investor by Benjamin Graham. You may also want to read the shareholder letters for Berkshire Hathaway. Berkshire Hathaway
  15. I am in the same position and will look to close out my positions tomorrow should oil futures drop. Looks like this will be a slow bleed instead of a catastrophic bang.