Market Commentary – January 17, 2008

Vessel Values & Stock Prices: A Sticky Situation

While the merit of NAV as a measure of shipping company value is often debated, the metric at the least provides a benchmark for how much a company would theoretically be worth if it were to instantaneously dissolve. That said the fall from an average shipping NAV in our weekly “Fair Value” table of 113% in mid-October to 68% today is worthy at least of comment. That said the same time period saw capesize values rise from $135 million to $151 million (11.9%) and VLCC values rise from $132 million to $138 million (4.5%). This however is not enough to explain the over 30% discount at which public shipping companies are trading, on average, to their liquidation value. Part of it, no doubt, is a lag factor as stocks are considerably more liquid than vessels. Part is momentum. But part makes one wonder if the shipowners sense something the investors don’t, or vice versa.

This is only an excerpt of Market Commentary – January 17, 2008

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