Day traders take advantage of Suez blockade

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As soon as retail investor Calvin Froedge heard that a huge container ship was stuck in the Suez Canal, he opened his laptop and started buying shipping stocks.

“It’s a huge shipping choke point,” said the American, who lives near another major waterway in Panama. “This is really kind of a black swan.”

Froedge is part of an increasingly influential army of day traders who – like WallStreetBets on Reddit – are embedded in a network of like-minded souls who exchange data in chat rooms and on social media platforms while posting a stream of memes. He is something of a celebrity among members of the so-called “Tanker Gang,” an informal Internet community that has sprung up in recent years to speculate on companies that transport oil and fuels.

Before the Suez Canal disruption, these tanker-loving investors were having a tough time, with share prices still struggling to recover from the pandemic. Then came Ever Given and stocks soared – Nordic American Tankers soared 15% on Friday, while American line Teekay Corp. rallied 13%. Alexander Hansson, a member of Nordic American’s board of directors and son of its founder, bought 50,000 shares of the company on Friday, a notice said.

Salvage crews partially refloated the Ever Given early Monday in Egypt and its position has moved by about 80%. Efforts are underway to prepare the giant vessel to leave the canal, almost a week after it ran aground. According to Mohab Mamish, advisor to the Egyptian president for the Suez Canal, it could take a week to get all the ships out of the canal corridor.

“We have already seen positive movements in spot rates in the wake of the closure,” said Joakim Hannisdahl, 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, often inserting himself into memes posted by the Tanker Gang. “I wasn’t 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 existed, it wasn’t easy for retail traders to keep track of the sector, which has a reputation for being a rather dull corner of the market. Tracking these companies often requires data that is hidden behind expensive subscriptions. But in recent years, the market has opened up thanks to people like Froedge and Hannisdahl, who post rigorous analysis on Twitter that sometimes moves stocks.

Froedge doesn’t find the tanker market boring. It is “arguably the most important part of the supply chain for the most important commodity on the planet. A war, a canal closure, tanker stocks go through the roof,” he said, adding that he had taken profits since the blockade in several companies, including Nordic American, Frontline Ltd. and SFL Corp. Ltd.

Tanker and shipping enthusiasts had been discussing the Suez situation on Froedge’s private Discord channel, which is part of his TankerData website that sells market information. One of the members had been overlaying Ever Given with diagrams of the channel, calculating exactly which part of the ship was stranded.

Tanker shares began falling on Monday following developments in the release of the Ever Given. Frontline was as much as 8.2% down in Oslo, after rising more than 10% on Friday.

Not everyone in the tanker gang was convinced that ship shares would soar. “I expect a small hit in regional rates simply because there will be fewer ships available for hire the longer this situation lasts,” Gregory Vousvounis, who is based in Athens and has been investing in tanker stocks since 2019, said ahead of the refloat. “If it’s a one-week shutdown, I don’t expect a material benefit to any stock, other than a positive narrative impact.”

Source Bloomberg

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