$ZIM - Playing spot exposure of containerships

So - good for DAC/GSL but bad for ZIM, right?

Also, thanks for sharing this good piece - ZIM’s valuation is a little absurd at this point.

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Grabbed the following:

  • Bunch of commons at market price for my longer term portfolio, about 1/3 the average position size
  • JAN 19, 2024 35C (yes, 18-month expiration) @ $19.50.

On the Leaps - Jan 2023 35C had IV of 92% while Jan 2024 35C had IV of 77%, making them almost the same price. No reason not to get that extra 12 months of runway for a about a dime’s worth premium. If ZIM doesn’t hit $55 again in the next 18 months, I should just quit trading.

Limit orders for:

  • Another 1/3 of average position size at $45 - feel like we might actually hit this next week if market is red enough and analysts pile in
  • And yet another 1/3 of average position size at $40 - this should really not hit, but if it does, it’s a gift. If it does not, I’ll just reprice it to whatever a reasonable price seems to be on the uptrend.

ZIM is a long term play, though it might take a while for the negative sentiment and relative supply chain slump to work out. Hence the longer term bet with commons and 18-month Leaps.

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Good writeup on current ZIM/shipping situation: https://www.reddit.com/r/Vitards/comments/vbo96d/almost_everything_you_need_to_know_about_zim/?utm_medium=android_app&utm_source=share

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Shanghai seems to be more or less back to normal wait times for various cargo ships, and both Drewry and Freightos indices are slightly lower.

The downward trend for ZIM is likely as a result of this. Still plan to load up on $45 and then again on $40, if we get there. Assumption is when market is reminded of juicy dividends again, stock will respond.

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Just saw this article on CNBC, didn’t realize things were so backed up in Europe due to labor strikes?

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Looks like FreightWaves is now realizing its not quite as doom and gloom in shipping as they were making it out to be.

According to The McCown Report, imports to the top 10 U.S. ports rose 5.9% year on year (y/y) to 2.16 million twenty-foot equivalent units, exceeding the 3% y/y gain in May and 5.1% gain in April.

Compared to June 2019, pre-COVID, import volumes to the top 10 U.S. ports were up 26.9% last month, said McCown. East/Gulf Coast ports were up 40.3%, West Coast ports 15.8%.

(Chart: Descartes. Data source: Descartes Datamyne)

According to Descartes, which just released its own report on U.S. containerized imports, “Every month in 2022 has been a record month when compared to the previous years.”

Descartes reported that there were 2.48 million TEUs imported to all American ports in June, up 3% y/y and up 26% from June 2019, pre-pandemic.

More than halfway through July, there’s still no sign of a material dropoff in traffic at America’s import gateways.

Meanwhile, the number of ships at anchor off U.S. container ports is still increasing. This is creating a growing “inventory” of import terminal demand.

The overall queue has now risen by 12% from 125 ships on July 8 and by 52% from 92 ships on June 10. Waiting ships hit a high of around 150 in January-February.

Nevertheless, they still note there is a “more moderate” peak season ahead…

Interesting thing is prices have actually started to move up:

Even though the freight rates are going down steadily:

The drop earlier was because of the downgrade from BofA and I suspect DAC also sold a chunk of shares, which they tend do after dividend payments.

Having said that, ZIM is much more exposed to spot rates than its competitors, so there is a danger they give weaker guidance. So considering taking a bullish position but not holding it through earnings.

There seems to be a secular tailwind on shipping. Probably some combination of higher volumes than 2021, upward adjusted guidance from MATX and earnings coming up, for dividend capture. I didn’t end up catching any of the spreads - they ran away from me and I did not feel like chasing on a green day. Thinking of getting Aug ATM calls instead though, not just on ZIM, but on three other tickers: DAC, GSL and CMRE.

Earnings are as follows:

  • DAC: 01 Aug
  • CMRE: 26 Jul
  • GSL: 01 Aug
  • ZIM: 18 Aug

I like these most out of the ones I track. They also have liquid, or somewhat liquid options.

Please use this link to check out the group of shippers we could choose from.

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Normally am very hesitant to double down, but ZIM is down 9%, no indication that earnings will be anything by satisfactory-to-stellar, found no other negative news, and Cramer dissed the stock today (which is probably triggering this correction).

So went ahead and doubled down and got as many 8/19 55C/60C bullish call spreads again for $0.52. (Prior buy was for $1.25).

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I like the cut of your jib.

Was thinking of entering similar position for their earnings after seeing your post, but figured I would wait to see what the market would be like on Monday.

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CMRE has started us off on a strong earnings season for shipping. Dividend paid out on Aug 8, so 2-3 days before then would probably be a good time to lose CMRE.

image

(Source)

All other tickers are moving up again after the negative week last week - GSL calls green already, ZIM still a bit red. Annoyingly, DAC orders never filled and just noticing that, so putting in some limit buys now.

DAC and GSL report on the 1st of Aug.

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Took profit on my lowly call for 15% gain, thanks for the callouts above.

Wide spreads and low volume on these calls, will look to enter back in on a dip if there is any… We did see a nice double bottom on the weekly

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https://finance.yahoo.com/news/zim-announces-participation-series-financing-200500965.html

Posting here so beak doesn’t have to keep repeating himself lol

Short term bearish, long term bullish.

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Averaged down and into more 55c for 9/16. Wonky bid asks allows you to get some pretty low entries on these.

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I grabbed a couple 8/19 52cs to hold through earnings. Nothing Major. I got them on the dip down in the 49s.

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I added a few more 8/19 52cs when it dropped to 50. Up to 10 total. CMRE beat earnings a few weeks back, and GSL beat earnings a few weeks back. I’m thinking that sector as a whole had a decent second quarter. Again, earnings are a risky play as there are always bits of the data the market reacts to more than just beating earnings.

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4.75 dividend payout on September 8th.

Unfortunately, the Market did not like the growth numbers enough to outweigh missing EPS. ZIM posted great growth YoY, (40% in sales, 50% in EPS). At $11.07 per share, they are still way ahead of competitors in that respect. I will hold onto my calls for about 30 mins after open to possibly regain some of the loss. The dividend payout is pretty solid, so i will hold onto my shares.

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ZIM is paying out a higher than expected dividend of $4.75/share, and annual yield is noted as 33%.

Since good news is bad news, markets decided to drop it 5% PM.

Sure, there was an EPS miss, but as @O4k-x-Tr33 notes, its miles ahead of peers. And it’s trading at a PE of one.

Sucks for the calls I am still holding though. Ah well.

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ZIM has returned to pre-earnings levels, and is going strong. No doubt because of the dividend payout.

ZIM is on borrowed time though. Container fright rates are falling, and ZIM has much exposure to this.

Thus, expecting prices to fall once dividend payment is made. For practical purposes, on or after the ex-dividend date of Aug 26.

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