Business
Article written by Mr. Anastasios Maraslis
S.T.I.C's CEO/President.MARASCO MARINE's/Managing Director.
There is
no investment which can bring returns without taking some risk, except one, and
that is Knowledge.
This is
why Fund Managers, Financial Advisors, Wall Street Gurus are highly remunerated
and their annual hefty success bonuses exceed the wildest dreams of most
ambitious and well paid executives.
Bonuses
flying at the range of few hundred millions us dollars to one or two billion!
Investors’ usual critical questions are; Where to invest and When?
Two
questions which demand knowledge, expert analysis and wise answers.
Fund
Managers and Financial Advisors usually have the knowledge and expertise to
know the right answers to these troubleshooting questions.
The last
two years they have focused in one of the most profitable but also risky (due
to its cyclicality) investment options, which is the Shipping industry!
Shipping
has been the talk of the day since 2012 as it is obviously a good investment
opportunity, now the freight market and vessels values remain at historical low
levels.
This is
why Private-equity and hedge funds are accumulating shipping debt at the
fastest pace since they began buying the risky loans from banks in 2012.
It can’t
be unnoticed that about us$ 5 billion in shipping loans has changed hands in
the past year, according to estimates by AMA Capital Partners LLC, a fund
manager and adviser in New York.
Investor
demand is driving prices as high as 90 cents on the dollar, from 70 to 80 cents
a year ago. Funds are betting ship prices that collapsed as much as 80 percent
in five years will rebound from historic lows.
Shipping
is a tangible and global business.
Investing
in Shipping - buying shares in Ship-Owning companies (SVP’s) - is a tax free
investment (at fund’s level) and despite the risks involved and asset values
depreciation in a bad freight market environment, where the demand for tonnage
is low, the vessels always retain part of their value, the scrap value, in case
of a distress sale in a catastrophic market or vessel’s age being too old.
Investors
in shipping anticipate combining income returns on their investment. One is the
income deriving from the trading and vessels management and the other is from
the sale and purchase gains, when the assets are liquidated at appreciated
prices, in a good freight market, where the demand for tonnage is brisk.
To get a
fairly good idea about Shipping investment opportunities we should look at the
price of a Capesize - the largest type of dry bulk carrier -which rose 50
percent in the past year to $44.5 million, that is 29 percent of the 2008 peak
of $153.8 million.
In view
of high profit opportunities new specialized Private-equity firms have been
established, like Starfleet Navigation Limited - teamed by highly experienced
shipping and investment professionals- which are willing to take ownership of
the assets and put it to work while they wait for prices to appreciate.
Having
said that it would be an omission not to mention that in view of the optimism
prevailing amongst the funds that are buying shipping loans there few that are
less familiar with shipping, if not at all, they are newbies and the risks they
take might be proven an expensive lesson.
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