/biz/ - Business & Finance

>>19123527
See now that's a valid point! It's probably true that tankers have no room for growth, after all they simply transport oil.

However, in my opinion, what more can you ask for then gaining money just by transporting oil? Think about their business plan for a minute: Let's assume the spot market rates for the next 10 years are above breakevens of 8k a day, which in my opinion is very reasonable. If you pick a company with proper management, and they redistribute 80% of the net revenue directly to the investor (DHT, EURN) and use the other 20% to maintain or order new ships etc, why wouldn't you invest? I'm not saying it's free money, the obvious risk is the constant chaotic nature of the market that the tankers exist in. After all, they have like 20 pages of reasons on most of the 10K's to explain why they're not guaranteed to make money. But then let's introduce the oil glut and contango that exist(ed?), these companies have already locked in favorable conditions that just straight up print money!

Another good argument is that a lot of these companies are saddled with debt. This was because in 2008 everyone was scrambling to produce and obtain tankers as fast as humanly possible, which meant a massive tanker oversupply that was never burned off and a shit ton of debt (fucking moronic management). Now we have a bunch of shipyards that aren't being used, constantly going bankrupt and the tankers themselves are more valuable when they're scrapped. However, after 12 years, we've reached record lows for crude tanker production. It's taken over a decade to reach an equilibrium between supply and demand, but we're finally reaching it, and that's why I'm optimistic about the future. I personally believe that as population increases, oil will need to be transported, and the production of tankers will finally balance out with demand.

The tanker sector is complex. Just because it hasn't been successful doesn't mean it's destined to fail.