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

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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#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.

#4. Teekay Tankers Ltd. (NYSE:TNK)

– Investors with long positions as of March 31: 16

– Aggregate value of investors’ holdings as of March 31: $99.99 Million

The smart money sentiment towards Teekay Tankers Ltd. (NYSE:TNK) declined during the first three months of 2016, with the number of money managers from our system with long positions in the company falling to 16 from 18 quarter-over-quarter. Meanwhile, the aggregate value of those positions plunged by 49% quarter-on-quarter to $99.99 million, mainly due to a 45% decline in the share price of Teekay Tankers’ stock. Almost 18% of the company’s outstanding shares were stockpiled by the 16 managers tracked by our team. The provider of international marine shipping, which owns 45 double-hulled conventional oil tankers and time-chartered in eight Aframax tankers, has seen its market value drop by 45% since the start of 2016. Teekay Tankers, which pays quarterly dividends that account for 30%-to-50% of quarterly adjusted net income, paid a cash dividend of $0.09 per share for the three months of 2016. The cash dividend equates to an annual dividend yield of 9.57%. Joe Huber’s Huber Capital Management has 18.66 million shares of Teekay Tankers Ltd. (NYSE:TNK) in its portfolio at the end of March.

#3. Gener8 Maritime Inc. (NYSE:GNRT)

– Investors with long positions as of March 31: 20

– Aggregate value of investors’ holdings as of March 31: $299.63 Million

The number of hedge funds monitored by our team with equity investments in Gener8 Maritime Inc. (NYSE:GNRT) rose to 20 from 18 during the March quarter, whereas the overall value of those investments dropped 31% quarter-over-quarter to $299.63 million. The massive decline was partially attributable to a 25% decline in the value of Gener8 shares. The 20 hedge funds invested in the company accumulated a whopping 51% of its total number of outstanding shares. The shares of the US-based provider of international seaborne crude oil transportation services are 18% in the red thus far in 2016. Gener8 Maritime, which is the result of a merger of General Maritime Corporation and Navig8 Crude Tankers Inc., posted voyage revenues of $13.0 million for the first three months of 2016, up from $121.4 million recorded a year ago. The jump was triggered by an increase in the fleet size and charter hire rates. Howard Marks’ Oaktree Capital Management reported ownership of 13.05 million shares of Gener8 Maritime Inc. (NYSE:GNRT) in its 13F for the first quarter.

#2. DHT Holdings Inc. (NYSE:DHT)

– Investors with long positions as of March 31: 24

– Aggregate value of investors’ holdings as of March 31: $119.34 Million

DHT Holdings Inc. (NYSE:DHT) fell out of favor with the “smart money” investors followed by Insider Monkey during the January-to-March period, when the number of asset managers with stakes in DHT fell to 24 from 31 quarter-over-quarter. Correspondingly, the dollar value of all those stakes plummeted by 42% quarter-on-quarter to $119.34 million, partly due to a 28% drop in the value of DHT shares. The 24 smart money investors accumulated 22% of the company’s outstanding shares. The operator of crude oil tankers, whose fleet consists of 20 operating crude oil tankers, has seen its market cap fall by the same 28% since the start of 2016. DHT Holdings paid a dividend of $0.25 per share for the first quarter, up from $0.21 per share paid in the fourth quarter of 2015, $0.18 in the third quarter and $0.15 in the second quarter of last year. The first-quarter dividend represents an impressive annual dividend yield of 17.2%. Christopher Pucillo’s Solus Alternative Asset Management had 4.39 million shares of DHT Holdings Inc. (NYSE:DHT) in its portfolio at the end of March.

#1. Golar LNG Limited (USA) (NASDAQ:GLNG)

– Investors with long positions as of March 31: 25

– Aggregate value of investors’ holdings as of March 31: $231.64 Million

Golar LNG Limited (USA) (NASDAQ:GLNG) also lost some charm among the hedge funds monitored by our team during the first quarter of the year, as the number of funds invested in the company declined to 25 from 29 quarter-over-quarter. Moreover, the aggregate value of those funds’ equity positions in Golar LNG decreased by 42% quarter-over-quarter to $231.64 million even though the company’s stock gained 14% during the three-month period. Roughly 14% of the company’s outstanding common stock resided the portfolios of those 25 hedge funds followed by Insider Monkey. The shares of the independent owner and operator of liquefied natural gas (LNG) carriers and floating storage and regasification units (FSRUs) are up 17% year-to-date. As LNG is cheaper than fuel oil and cleaner-burning than coal, Golar LNG, which has a fleet of 19 LNG carriers and seven FSRUs, is anticipated to have a lot of business in the upcoming years due to increased demand from emerging economies. Christian Leone’s Luxor Capital Group trimmed its stake in Golar LNG Limited (USA) (NASDAQ:GLNG) by 46% during the March quarter to 5.04 million shares.

Disclosure: None