Should Investors Buy the Dip in Scorpio Bulkers (SALT) Stock?

Evermore Global Advisors recently released its Q2 2020 Investor Letter, a copy of which you can download here. The Evermore Global Value Fund posted a return of 10.35% for the quarter, underperforming its benchmarks, the MSCI All Country World Index ex USA (MSCI ACWI ex USA), the MSCI All Country World Index (MSCI ACWI), and the Morningstar World Small/Mid Stock Category Average. You should check out Evermore Global Advisors’ top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Evermore Global Advisors’ highlighted a few stocks and Scorpio Bulkers Inc. (NYSE:SALT) is one of them. Scorpio Bulkers Inc. (NYSE:SALT) is a shipping company. Year-to-date, Scorpio Bulkers Inc. (NYSE:SALT) stock lost 77.4% and on July 31st it had a closing price of $14.66. Here is what Evermore Global Advisors’ said:

“Scorpio Bulkers (SALT US), a dry bulk cargo operator, was the third largest detractor to Fund during the quarter. The most notable news occurred in June when the company raised $76 million of additional equity. While an equity raise was not a dire necessity in our view, Scorpio Bulkers wanted to establish a strong liquidity runway and flexibility well into 2023 (at current depressed levels) in case there is a prolonged recovery from COVID-19. With this cash raise, SALT boosted its liquidity position to over $200 million, of which $180 million is in cash and its residual stake in Scorpio Tankers. We believe the equity injection should allow SALT to refinance its debt and prepay some of its scheduled amortization, which in turn should help to negotiate future debt amortization relief from a position of strength. Management and insiders participated in the deal (at the same terms) and contributed to 20% of the equity raise.”

Sheila Fitzgerald/

In Q1 2020, the number of bullish hedge fund positions on Scorpio Bulkers Inc. (NYSE:SALT)  stock decreased by about 36% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Scorpio Bulkers’ growth potential. Our calculations showed that Scorpio Bulkers Inc. (NYSE:SALT) isn’t ranked among the 30 most popular stocks among hedge funds.

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Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.