In this piece, we’ll look at one of the top hedge fund shipbuilding stocks and one of the biggest shipbuilding companies in the world. We’ve also made a full, free list of all the largest shipbuilding companies in the world, and you can check it out by reading 15 Biggest Shipbuilding Companies in the World.
Ships are one of the integral components of the global transportation industry. As the population grows and living conditions improve, there will be more demand for goods, which is expected to drive the demand for goods transportation by sea. Moreover, the tourism industry is also driving demand for cruise ships and ferries. For example, mega oil tankers are responsible for maintaining a supply chain that allows millions of barrels of oil to be shipped around the globe every day. These firms can benefit from stable demand and generate profits, which makes them good investment opportunities. There are, many oil tanker stocks that pay dividends, such as Genco Shipping & Trading Limited (NYSE:GNK). Genco’s forward annual dividend yield is 3.83%, higher than tech giant Google’s parent Alphabet Inc. (NASDAQ:GOOGL).
Fueling these large industrial bases is the global shipbuilding industry, which according to research reports can grow to be worth as much as $220 billion by 2023 end and $279 billion in 2028. Most shipbuilding companies are concentrated in a few advanced industrial nations. Out of the top 15 shipbuilding countries in the world, Japan, Korea, and China accounted for 94.2% of global ship output as of 2021. The United Nations Conference on Trade and Development’s (UNCTAD) data for 2023 shows that Asia maintained its global edge, accounting for 95% of global ship production.
When looking at the top shipbuilding countries, the geographical concentration allows us to identify the biggest shipbuilding companies in the world. Since building ships requires large amounts of capital expenditures, some of the largest shipbuilding firms are subsidiaries of other companies. However, some companies are also independent and publicly-traded, such as the South Korean Hanwha Ocean Co., Ltd. (KRX:042660.KS). Hanwha Ocean is worth more than $7 billion, and the stock is up 40.6% over the past 12 months and 27.5% year-to-date. The firm is currently eyeing expansion in the lucrative Pacific shipbuilding market that has seen fresh interest after U.S. military partnerships under the AUKUS program (a trilateral partnership between the US, Australia, and South Korea) sought to grow capabilities aimed at countering the Chinese.
Another beneficiary of this partnership is the Australian defense and shipbuilding firm Austal Limited (ASX:ASB.AX). Austal is one of Australia’s largest shipbuilding companies and it raked in A$1.5 billion ($1.0 billion) in revenue during its last fiscal year. It is a key US and Australian partner for the AUKUS program and has received multiple contracts from Australian and US navies for patrol boats and landing craft. An Australian contract in November 2023 ordered two patrol boats for A$157 million ($104 million) and later its US division kicked off work on building patrol boats for the US Navy under a $91.5 million contract. Moreover, Austal had a takeover offer from Hanwha, which it rejected, but which also boosted the stock by 14%.
As a whole, the global shipbuilding industry is divided into categories such as oil tankers, defense products, and cargo vessels. Within these, the container ship industry has faced a lot of criticism due to its contribution to global emissions. These ships account for 3% of all of the world’s greenhouse gas emissions, and the heat that the industry has faced due to the emissions has also led to interesting shipbuilding solutions. For example, Schooner Apollonia is a ship that relies on wind to remove trucks and polluting fuel out of the equation for some beer shipments between Kingston and New York City. On the commercial side, the International Maritime Organization (IMO) shared in January that “30 large commercial vessels in operation with WPT [wind-assisted propulsion technologies] installed, a further eight wind-ready ships and 16 more large vessels installations pending” were responsible for 2.2 million dead weight tons (dwt) of shipping capacity.
Finally, a smaller piece of the global shipbuilding industry is the cruise ship sector. The global cruise industry is estimated by some to grow to $15 billion by 2028 end, and after the coronavirus pandemic, analysts also believe that cruise companies might continue to benefit from strong demand.
With these details in mind, let’s take a look at one of the biggest shipbuilding companies in the world.
Huntington Ingalls Industries, Inc. (NYSE:HII) Is One Of The Best Shipbuilding Stocks To Invest In According To Hedge Funds
Huntington Ingalls Industries, Inc. (NYSE:HII) raked in $11.5 billion in revenue over the last four quarters. This not only made it one of the largest shipbuilding companies in the world, but also made it America’s largest shipbuilding company.
Huntington Ingalls Industries, Inc. (NYSE:HII) is one of the most important shipbuilding firms in the U.S. This is because it makes aircraft carriers and submarines. Huntington Ingalls Industries, Inc. (NYSE:HII) reported its first-quarter earnings in April and managed to beat analyst revenue and EPS estimates of $2.79 billion and $3.53, respectively. The company posted $2.8 billion in revenue and $3.53 in EPS. However, the stock dipped on the back the earnings release on the back of concerns regarding cost controls.
Insider Monkey took a look at hedge fund investment filings for the first quarter of 2024 and found that 31 held stakes in Huntington Ingalls Industries, Inc. (NYSE:HII). Among these, Cliff Asness’ AQR Capital Management owned the most valuable position, worth $150 million.
While defense contractor General Dynamics Corporation (NYSE:GD) had seen 54 hedge fund hold stakes in it, Huntington Ingalls Industries, Inc. (NYSE:HII) is a pureplay shipbuilding company. Additionally, while it is the third biggest shipbuilding company in the world in revenue terms, it is the biggest US publicly listed company in this industry.
To check the free full list, please visit the 15 Biggest Shipbuilding Companies in the World.
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Disclosure: None. This article is originally published at Insider Monkey.