2007

“Invest in Shipping”

Thanks to Capital Link and Fortis Bank, investors were treated last Friday to presentations from a myriad of publicly traded shipping companies covering the container, gas, tanker and dry bulk segments. Adding insights to the company presentations were the equity analysts and brokers together with a lunch presentation by Guy Verberne of Fortis on Shipping and the Global Economy Today.

Some of the more interesting take-aways for us included the following:

Mr. Pittas of Euroseas, Dr. Coustas of Danaos and Mr. Molaris of Quintana all had interesting comments on ship management. Mr. Pittas believes an affiliated ship manager cares more about your vessels than a fee-based third party manager. Dr. Coustas spoke about his company’s policy of separating ownership from management. Not only does this provide better control of costs but also limits liability. As an example of the latter, Dr. Coustas pointed out that if OSG had an affiliated rather than an in-house manager, the responsibility for the pollution incident would have stopped legally (but perhaps not ethically) with the manager. Finally Mr. Molaris spoke in terms of the impact on G&A expense of the in-house management. He reiterated the benefits of an affiliate including a vested interest and the separation of risk versus a third party, which has no vested interest in the vessels. Naturally no one spoke about the inherent potential conflicts of interest resulting from using an affiliate, which is a significant concern in the public markets that demand transparency.

This is only an excerpt of Market Commentary – 03/29/2007

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