Ships are anchored at the entrance of Suez Canal, in Suez, Egypt March 29, 2021. REUTERS/Mohamed Abd El Ghany

Tanker Gang: Day Traders Cash In On Suez Blockage

Bloomberg
Total Views: 12995
March 29, 2021

By Stephen Stapczynski (Bloomberg) As soon as retail investor Calvin Froedge heard that a massive container vessel was stuck in the Suez Canal, he pulled his car over to the side of the road, opened up his laptop, and started buying shipping stocks.

“It’s a huge shipping chokepoint,” said the American, who lives near another important waterway in Panama. “This is actually kind of a black swan thing.”

Froedge is one of an increasingly influential army of day traders who — like WallStreetBets on Reddit — is embedded in a network of like-minded souls that swap data in chat rooms and on social media platforms, while also posting a stream of memes. He’s something of a celebrity among members of the so-called ‘Tanker Gang,’ an informal Internet community that has emerged in the last few years to speculate on companies that transport oil and fuels.

Before the Suez Canal snarl-up, these tanker-loving investors had been having a tough time, with share prices still struggling to recover from the pandemic. Then the Ever Given came along and stocks surged: Nordic American Tankers jumped 15% on Friday, while American line Teekay Corp. rallied 13%. Alexander Hansson, a board member at Nordic American and the son of its founder, bought 50,000 shares of the company on Friday, a filing shows.

Salvage teams partly re-floated the Ever Given early Monday in Egypt and its position has been moved by about 80%. Efforts are underway to prepare the giant ship to leave the channel, almost a week after it ran aground. It could take around a week to get all vessels out of the Suez canal corridor, according to Mohab Mamish, the Egyptian president’s adviser for the Suez Canal.

“We have already seen positive spot rates movements on the back of the closure,” said Joakim Hannisdahl, the head of research at Cleaves Securities in Oslo, who has been covering the sector for more than a decade. Hannisdahl shares much of his research on Twitter, and is often inserted into memes posted by the Tanker Gang. “I was not familiar with memes before I joined Twitter a few years ago, but they are very entertaining,” he said.

Before online communities like the Tanker Gang, it wasn’t easy for retail traders to track the industry, which has a reputation for being a fairly dull corner of the market. Monitoring these companies often requires data that’s locked behind pricey subscriptions. But over the last few years, the market’s been prised open by the likes of Froedge and Hannisdahl, who post hard-nosed analysis on Twitter that sometimes moves stocks.

Froedge certainly doesn’t find the tanker market boring. It’s “possibly the most important part of the supply chain of the most important commodity on the planet. A war, a canal closure, tanker stocks go ballistic,” he said, adding that he’d made gains since the blockage on several companies including Nordic American, Frontline Ltd. and SFL Corp. Ltd.

The tanker and shipping enthusiasts had been analyzing the Suez situation in Froedge’s private Discord channel, part of his TankerData website that sells market info. One member had been overlaying the Ever Given with the canal’s schematics, figuring out exactly how much of the ship was beached.

Tanker shares began tumbling Monday after progress was made on freeing the Ever Given. Frontline dropped as much as 8.2% in Oslo after jumping more than 10% on Friday.

Not everyone in the Tanker Gang was convinced that shipping stocks were set to soar. “I expect a small bump on regional rates simply because fewer ships will be available for hire the longer this situation lasts,” Gregory Vousvounis, who is based in Athens and has been investing in oil tanker stocks since 2019, said on Friday before the re-floating. “If this is a week-long closure, I don’t expect material benefit to any stocks other than a positive narrative impact.”

–By Stephen Stapczynski, With assistance from Jason Rogers.

Copyright 2021 Bloomberg

Tags:

Back to Main