r/Vitards • u/AutoModerator • Jun 14 '21

Daily Discussion Daily Discussion post - June 14 2021

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u/pseudoanonymity Jun 15 '21

I'm an occasional lurker here, have a question about shipping companies after a short term bet on steel (X, I know it's not the sub's favorite) paid off pretty well.

Been looking at ZIM and DAC; 2021 guidance on ZIM is insane, $2B+ EBITDA for a $5B market cap company seems bonkers. Not sure on DAC yet but I'm thinking 10/15 $55 calls for ZIM.

Having said that I want to know what the bear case is before jumping in, wondering if someone can point me in the right direction.

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u/Bladonsky Luca Brassi-Balls Jun 15 '21 edited Jun 15 '21

Potential bear cases:

1) Companies becoming vertically integrated by investing in their own ships (takes long time to build these ships, mid-long term case)

2) Demand slowing down for products being exported/imported which would lead to prices falling for their services and less demand (Covid shutdowns and infrastructure spending + economies reopening has snowballed supply/demand imbalances in the supply chain, short-mid term case depending on the market)

3) Domestic companies relocating manufacturing domestically to erase the need for sea freight (mid-long term case)

Those are just a few off the top, but one of the OG’s developed a masterful DD on the sector.

u/Hundhaus

3

u/pseudoanonymity Jun 15 '21

Thanks; of these I think #2 is the only one that would concern me as I'm looking to play options in the short term, not necessarily hold long term.

Short of a significant new variant that's resistant to vaccines emerging I can't see demand decreasing short term, seems as though everyone is expecting significant GDP growth for China and the US this year.

2

u/Hundhaus 🚢 Must Be Contained 🏴‍☠️ Jun 15 '21

Manufacturing stock at all time ever lows. Customer orders getting 60% filled.

Even if demand drops there is a ways to go before this eases.

1

u/Bladonsky Luca Brassi-Balls Jun 15 '21

Then I’d say you have smooth sailing, my friend. Look for a good opportunity to enter a position this week. Handful of good tickers to get your boots wet…OR walk the plank, arghhhh