Noah’s arc

Canaccord Genuity has initiated research coverage of the dry-bulk segment and six US-listed bulker stocks.

In a note emailed to clients Noah Parquette said the industry is coming off a cyclical low that, in hindsight, likely occurred in the middle of 2013.

The analyst, who is based in the Canadian investment bank’s Manhattan office, argued that the capesize sector will be on the front line of a rally from both a supply and demand perspective.

“Demand growth has remained strong, driven by appetite in developing economies for iron ore, coal, grain, and many minor bulks,” he continued, adding:

“In particular, the outlook for high-grade imported iron ore into China from Australia and Brazil, and the potential for coal imports into India, looks promising.

“On the supply side we see capesize rates being increasingly volatile as oversupply slackens and believe Q4 could see another strong spike due to seasonal volatility.”

The forecaster believes the dry-bulk market will hit “mid-cycle levels” toward the end of 2015 and expects to see a near-term cyclical peak take shape a year later.

Parquette stamped shares of Navios Maritime Holdings, Paragon Shipping, Safe Bulkers and Star Bulk Carriers with “buy” ratings.

“Hold” recommendations were handed out to Nasdaq-listed compatriots Baltic Trading Ltd and Knightsbridge Tankers.

Parquette’s initiation of dry-bulk stocks marks the latest phase of a campaign to cash in on the rising tide of owners that are looking to tap the capital markets.

In March Canaccord hired industry veteran Henry Williams to serve as the managing director of its maritime, energy services and infrastructure unit.

A few weeks later the firm poached Parquette from Maxim Group to oversee shipping research in a move that marked the conclusion of a tour that lasted only seven months.

As TradeWinds has reported, observers believe Canaccord’s recruitment initiative represents a broader bid to expand its presence in an industry that has been on its radar for some time.

Market sources say they wouldn’t be surprised to see the investment bank initiate research coverage of tanker and offshore stocks in the months to come.


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