It’s always interesting to read shipping related coverage in the FT, especially when, as here, the article describes the nice compensation that some hedge funds managed out of shipping investments (“Hedge funds supported by volatile years for shipping”), Report31 December).
Compared to the frothy years before the collapse of the Lehman Brothers – when investment funds often took a direct stake in ship ownership – this time, as the article explains, the funds’ appetite seems to be mainly focused on equities and other financial products which to the ebb and flow of the shipping market.
Unlike dealing with cargo-derived instruments, investing in and especially withdrawing ship assets – that is, the ships themselves – can be a difficult exercise as immediate liquidity is far from guaranteed.
Hedge funds have tried to pump capital into ship ownership in the past, when strong freight rates supported it. This was mainly due to placing “newly built” orders which subsequently increased the available shipping capacity, but hampered the market’s recovery after 2008 due to stubborn excess supply (mainly in dry mass and tankers).
Since the funds’ attention is now hopefully not focused on asset investments that in turn could affect the supply-demand balance, shipping practitioners can find comfort in the fact that shipping will be left to their own devices this time around. Maybe it’s better for hedge funds, too.
Member, Institute of Chartered Shipbrokers, Athens, Greece