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  • Writer's pictureRyan Lynch

Testing Variable Significance - Aframax Tanker Case Study

This week we look at the EV/EBITDA multiple of an

MOIC - 23 February
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Aframax through time to determine if there are any logical and causal inferences from an investment standpoint.

While we cannot strictly confirm a causal factor, after controlling for time series bias, we find that trailing inflation (US-Core CPI), USD strength and past values of asset price are all impactful positively & significantly for forecasting effect. This research builds on what we find is a consensus in the investment community that fundamental values (discounted cash flows etc.), tend to be dis-aggregated with return profile due to a yield seeking behavior by investors within a micro-asset class that would otherwise be at the margin (non traditional shipowners here).

While our findings do not robustly define within-industry fundamentals as strictly impactful, namely oil-price structure, we have evidence that looking through the micro to the macro for shipping investments may be prudent irrespective of earning expectations.

Data & other resources are of course available upon request,

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