Shares, not ships

John Fredriksen’s Frontline 2012 is believed to have been busy buying up shares rather than ships during the past few months.

Oslo over-the-counter (OTC) listed Frontline 2012 is tipped to have purchased as much as $100m worth of its own stock since it initiated its buyback plan in May.

Erik Nikolai Stavseth of Arctic Securities says during the second and third quarters as many as 16 million shares may have been picked up on the open market.

“Frontline 2012 sees no need to add more tonnage as the cheapest ships are available through their own share price,” the analyst added.

The owner revealed plans to buy back up to one fifth of its own shares when it reported its first quarter results.

It had already snapped up over $8m worth of its own shares when the initiative was announced.

In a study conducted by TradeWinds in June, Frontline 2012 was revealed to have been the most successful shipowner on the newbuilding scene over the past couple of years.

It was calculated to be over $400m in profit on its newbuilding investments since the summer of 2012.

Consensus expects the shipowner to report an operating profit of $11.7m in the second quarter.

Projected net profit of $52.8m is aided by income from the spin-off of its capesize fleet and refunds on VLCC newbuilding cancellations.

Stavseth says, after the spin-off of both the capesize and VLGC fleets, it is more difficult to predict the owner’s next move.

“By no means does the future look less bright, but we argue a more vocal Board and management would do well at this point – particularly as Mr Troim will now focus efforts on non-shipping related companies,” he said.