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Rising Oil Does Not Convince Hedge Funds to Bet on Oil Tanker Stocks

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Crude oil prices touched a near 13-year low in the first quarter of the year and have recovered from the late January – mid-February price levels due to a combination of robust demand and weak supply growth. A number of other events across the globe, including attacks from militants and oil pipeline vandals in Nigeria, have been moving global oil markets closer into balance faster than anticipated. However, the recovery of crude oil prices since bottoming in mid-February did not result in increased hedge fund interest towards the critical oil shipping industry. The oil shipping industry has a crucial role in the overall oil and gas business, considering that two-thirds of crude oil are transported by sea. With crude oil prices trading around the $50-level, oil tanker companies appear to offer a more appealing investment opportunity than during the first quarter of the year. So let’s have a look at how the hedge funds tracked by Insider Monkey felt about oil tanker stocks during the first three months of 2016.

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Cheniere LNG Tanker Shipping Ship Liquid Natural Gas Vessel Fuel Carrier

Oleksandr Kalinichenko / Shutterstock.com

#5. Frontline Ltd (NYSE:FRO)

– Investors with long positions as of March 31: 12

– Aggregate value of investors’ holdings as of March 31: $16.23 Million

There were 12 asset managers followed by Insider Monkey with equity stakes in Frontline Ltd (NYSE:FRO) at the end of the first quarter of 2016, as compared with 11 managers registered at the end of the fourth quarter of 2015. Nonetheless, the overall value of those equity stakes plunged 68% quarter-over-quarter to $16.23 million, partially due to a 42% drop in the value of Frontline shares. Hence, asset managers were actually reducing their exposure to Frontline during the first quarter of the year. Just recently, the company announced the formation a commercial joint venture called Suezmax Chartering with two other companies, with the venture operating a fleet of 43 modern Suezmax vessels, which are crude tanker vessels carrying roughly 130,000 tons of crude. Frontline, whose fleet consist of 83 vessels, including new-buildings, is set to contribute 22 vessels to the joint venture. Frontline’s shares are down by some 30% year-to-date. Michael Thompson’s BHR Capital acquired a new stake of roughly 897,000 shares of Frontline Ltd (NYSE:FRO) during the March quarter.

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