4th
What’s up maritime stock pickers?
What is a shipbroker? a person having one or several occupations: chartering agent or owner’s broker, negotiating the terms of the charter of a ship on behalf of a charterer or shipowner respectively; sale and purchase broker, negotiating on behalf of buyer or seller of a ship; ship’s agent, attending to the requirement of a ship, her master and crew while in port on behalf of the shipowner; loading broker, whose business is to attract cargoes to the ships of his principal.
“One or several occupations” - this is a key part of the definition, as it gives the clue to one of the amazing abilities that shipbrokers possess: the ability to redefine their services to fit prevailing market conditions. Make no mistake, shipbrokers are working really hard at the moment trying to earn their living. Some of their ship owning clients are operating their ships at less than break even - listen here to the tanker podcast - and when the market rates for chartering ships is low, the brokers’ commission is low. (Brokers typically earn 1.25% of the value of the fixture or 1% of the value of the ship in a sale and purchase transaction)
So, what’s going on with the share price of the big listed brokers? The graphs below show the 12 month share price of 3 brokers.
ACM:
Why the disconnect between shipbroker commissions and the share price of the companies that rely so heavily on those commissions for their revenue?
Here’s how they define themselves:
Clarksons - ‘…are the world’s leading provider of integrated shipping services…’
Braemar Seascope ‘…is a leading international provider of shipbroking, consultancy, technical, logistics and other services to the shipping and energy industries…’
ACM ‘…is one of the world’s leading shipbrokers providing a single point of contact for the seaborne transportation of oil, refined products, liquid petroleum gas and dry bulk commodities…’
Given that ‘shipbroking’ revenue accounts for 75% of Braemar Seascope profits, for 83% of Clarksons turnover and that ACM shares have bounced back since falling on their June announcement of a 24% fall in profits it seems like shipbrokers are masters at redefining their services because someone’s marking their share price up!
