TheStreet.com quotes us on the state of the German shipping sector
We were pleased to be quoted by TheStreet.com's Andrew Bulkeley, who relied on statistics we gathered regarding the composition of the German KG shipping sector and statements from public banks, law firms, private equity investors and other industry actors to paint a negative portrait of the present state of the German shipping sector.
As in the article, we don't share the doom and gloom prognosis, and we are not alone. The German shipping sector displays the typical virtues of the Mittelstand: long-range planning and strategic thinking, family ownership and strong local geographic ties, leading to heroic measures to sustain livelihoods, and an exceptional network of personal maritime contacts.
Bubble? Scary end? Sounds all very dire.
And indeed, the KG model, which is the biggest target of the article, has been rightly dispensed with in recent years, and did in fact has pose a threat to "real" German shipowners. Relying on capital from private citizens looking for an annuity-style dividend-bearing investment created a lot of uneconomic single ship corporate entities which have entered into insolvency in recent years. These are now being acquired by shipowners better positioned to accept the operational risk inherent in the maritime sector, and as a result, the German market is rebalancing.
Much of the negative sentiment in the article originates from White & Case, a law firm that has strong ties to the insolvency sector and derives much of its revenue from the same. As such, their comments as to the German shipping sector and its alleged needed consolidation must be taken in context and considered from a position of prudent skepticism.
Our quote on the state of German shipping appears below:
For investors that lack endurance and risk tolerance for a tough but rewarding industry, I might humbly suggest the 10 new stocks loved by billionaire David Einhorn noted above.
For everybody else, the old adage still applies: the best business is maritime business.