How Have Hedge Funds Played Crude Oil Tankers?



2Q15 hedge fund and institutional investor activity in crude oil tankers

Trade activity among institutional investors with exposure to crude tankers revealed mixed activity in 2Q15. These tanker companies include Nordic American Tankers (NAT), Teekay Tankers (TNK), Navios Maritime Midstream Partners (NAP), Scorpio Tankers (STNG), and Tsakos Energy Navigation (TNP). These crude tanker companies are among the best-performing stocks in the shipping industry and on average have generated returns of ~38% so far in 2015.

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In spite of generating outstanding shareholder returns of about 59% this year, NAT experienced a 4.68% fall in shares held by institutional filers, including hedge funds and other financial institutions. Hedge funds such as Huber Capital Management, Peak6 Capital Management, Hutchin Hill Capital, and Forward Management all lowered their exposures to NAT.

Among the top funds, Jim Simons’ managed quant hedge fund Renaissance Technologies and PDT Partners increased their respective positions in NAT. Renaissance Technologies increased its stake by 220% from the previous quarter to ~2.0 million shares in 2Q15. In dollar value, the position is worth $28.8 million and represents 0.07% of the hedge fund’s $43.9 billion long portfolio. The latter purchased close to 216,000 shares in NAT during the same period, and its position is worth $3.7 million.

On the other hand, in 2Q15, institutional filers on aggregate were bullish on Teekay Tankers (TNK), as the crude tanker operator experienced a 20.77% increase in shares held by institutional filers. When trade activity among hedge funds with significant dollar exposure to TNK is considered, a similar trend is evidenced. Encompass Capital Advisors, Lorem Ipsum Management, and Renaissance Technologies all established new stakes in TNK. Huber Capital Management increased its position by purchasing 2.2 million shares.

The only hedge fund among the top five with significant stakes in TNK to lower its stake was Contrarian Capital, which trimmed its stake by selling ~28,000 shares. TNK’s return profile since the drop in oil prices has been quite compelling with trailing 12-month returns of 60.19%. It ranks slightly behind NAT, which has generated 66.82% returns over the same time frame. NAT and TNK together constitute 0.08% of the iShares Russell 2000 ETF (IWM).

Navios Maritime Midstream Partners (NAP) and Tsakos Energy Navigation (TNP) witnessed slight reductions of 1.32% and 0.31%, respectively, from institutional investors during 2Q15. Scorpio Tankers (STNG) experienced a 3.28% increase in shares held by institutional investors during the same period.

It’s safe to assume from these trades that there’s no radical change in the long-term outlook for crude operators from the perspective of institutional investors.


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