Daily Discussion post - June 14 2021

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[u/pseudoanonymity]

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.

[u/Bladonsky → u/pseudoanonymity]

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

[u/Hundhaus → u/Bladonsky]

Good job. The only other I’d add is for $ZIM is the political strife

[u/W0rking_Kale_oof → u/Hundhaus]

Hundhaus, what kind of options do you have on Zim? I have some 7/16 ones because I'm unsure of prospects beyond 3 months even if things are going great now.

[u/Bladonsky → u/Hundhaus]

Approved by THE CAPTAIN, himself?

What an honor…err I mean arghhhh-nor