Fundamental analysis and relative efficiency of maritime firms: dry bulk vs tanker firms

Abstract

This chapter examines the relative efficiency of companies in the dry bulk and tanker markets by combining data envelopment analysis with fundamental analysis. The chapter builds on the concept of the efficient markets hypothesis to assess relative market and operational efficiency in the dry bulk and tanker markets. The chapter contributes an original approach towards the understanding of market and operational efficiency, both of which have great practical and scientific significance in the dry bulk and tanker markets of the shipping industry. It has been widely reported that since 2004, probably coinciding with the phenomenal increases in freight rates in the tanker and dry bulk markets, many shipping companies have chosen to list on stock exchanges through initial public offerings or IPOs (LSE, 2008a, 2008b). Despite the fact that the IPO markets have slowed down during 2008, activity by the already public companies has continued with follow-on and secondary offerings, including continuous equity programmes. In 2008, follow-on offerings comprise those of TBS International (US$173m), Genco Shipping’s (US$282m), Nordic American Tankers (US$159m), Double Hull Tankers (US$84m), Teekay LNG (US$144m), Seaspan (US$219m), and Dry Ships and Top Ships US$51m private placement of 7.3m shares. Funds raised on US markets by shipping companies from IPOs and follow-on issues during the first seven months of 2008 aggregated to a value of about US$1.5bn (LSE, 2008b).