TORM PLC (TRMD)

[dealorfx]

Analyst Sees BDI Lift, Suggests Dry Bulk Short Squeeze (DSX, GNK, EXM, DRYS, ONAV, OCNF, EGLE)
by Owen Vater | March 29th
Analysts at Credit Suisse are bullish on Diana (DSX) and see a potential short squeeze elsewhere in the sector.

The Baltic Dry Index (BDI) — an industry benchmark for rates in the dry bulk shipping segment — has pulled back since breaking above 3,500 for the first time since December earlier this month. The index remains well off its November high of more than 4,650, but Credit Suisse is bullish on select dry bulk stocks, citing economics related to the recent shipping rates for Capesize and Panamax vessels. The firm called Diana its top pick in the segment, and suggested that Genco Shipping & Trading’s (GNK) “significant short interest” could get squeezed in the event of a BDI reversal.

A rebound for the benchmark would mean good things for the laggard Dry Bulk Shipping Stocks Index. As a whole the Index has trailed the S&P 500 by -6.5% over the last month, and the majority of its components remain more than -25% off their 52-week highs.

Excel Maritime Carriers (EXM), pro-favorite DryShips (DRYS), Omega Navigation Enterprises (ONAV), and OceanFreight (OCNF) all closed -50% or more from their respective one-year high water marks on Friday.

The shorts weighed on Genco as well as Eagle Bulk Shipping (EGLE) last week as the stocks slipped by more than -4% in five sessions. It will be interesting to see whether Credit Suisse is on target with its BDI optimism, and whether it’s enough to scare some bears into covering their bets.

As of this writing, the Dry Bulk Shipping Stocks Index is one of the 15 worst-performing tickerspy Indexes over the last month, down by -1.2%.

http://www.tickerspy.com/newswire/?p=1827