Tankers Set To Rally.

Potential 1-3x on this low debt Co. trading at a fraction of replacement value.

Dear ROI Club Members,

Below lies an article and video delving into the tanker sector and my latest investment in $DHT. If you enjoy this take, I’d greatly appreciate you sharing this article with your friends.
Also, if you’re interested in how I’m buying and selling insurance options on this stock be sure to check out a free trial of my premium publication ‘The Maverick Life’ where I share the trades I make to generate location-independent income.

Tanker stocks look set to really rally here!

In my view, the set up for the tanker sector is the best it’s been in a LONG time, potentially it could be the best ever given that the current fleet appears to be saturated whilst the order book for the near term future for VLCC is at merely 1.9% of the current fleet.

If that wasn’t enough, the supply of vessels appears even more tight when one considers the following facts:

- 15% of the current fleet is over 15 years old

- 14% of said fleet is over 20 years old

- By year’s end in 2025 there will be circa 90 ships 20 years of age or more.

I cannot pretend to be able to accurately predict the exact number of vessels that will hit the water over the next 2-3 years but I think it’s safe to say that number will not be enough to flood the market with additional supply capacity.

On the demand side, OPEC cuts and geopolitical fissures make it more likely than not in my view that tankers will remain in demand hence TCE rates are likely to remain higher plus the fact trade route changes will likely lead to additional tonne miles being added.

For anyone interested, the below video gives my overview on a VLCC pure play $DHT. I estimate the replacement cost of the company to be roughly $20 per share, albeit that’s calculating for brand new vessel costs. The company has no debt of which to speak, almost 100% leverage to an upside in spot rates whilst their breakeven sits at roughly half of their contracted rates for Q2 ($26.7K Vs $46.3K). Whilst analysts expect an EBITDA of c. $318 mm given that most of their fleet remains tied to spot, if rates were to get to their 5yr ave for October the Co. could do 2-3X that (rough chance, but decent torque) that would be the bull case. 

In a base case I explain why I see a realistic case for 40% upside by end of ‘23.

Management own over 15% of the shares outstanding and are committed to a shareholder return program = 100% of net income!

I’m long the stock via straight equity as well as some options plays which you can check out in my ‘stack.

Just my opinion, do not rely.

Let’s see what happens.

Benjamin Demase - The one Man Insurance Co.

Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Always consult with a professional financial advisor before making any investment decisions.

Disclaimer: Before we dive into today's video, I want to emphasize that the content on The ROI Channel is strictly for informational and educational purposes only. Any opinions expressed in our videos and publications are solely our own and should not be considered as personalized financial advice. Investing in the stock market and other financial markets involves inherent risks, and individual circumstances vary greatly. What may be suitable for one investor may not be appropriate for another. We strongly recommend consulting with a qualified financial advisor or professional before making any investment decisions. The information provided in our videos and publications is based on sources we believe to be reliable, but we cannot guarantee its accuracy, completeness, or timeliness. Market conditions can change rapidly, and past performance is not indicative of future results. Please remember that all investments carry a degree of risk, including the potential loss of principal. Therefore, it is essential to conduct your own research and due diligence before making any investment decisions. By watching and engaging with our content, you acknowledge that you have read and understood this disclaimer. The ROI Channel and its creators will not be held liable for any financial losses or damages resulting from actions taken based on the information provided in our videos and publications.