"The United States has been downgraded, and this is how bad it is: Even Greece won't talk to us," joked Jay Leno last month. Indeed, Greece, like the other big European entitlement states, teeters on bankruptcy. European Union and International Monetary Fund leaders met over the weekend to try to stave off a situation in which the country would run out of money in less than a month.
Given that environment, allocating money to a Greek stock now seems crazy, not unlike buying a Latin American fund in 1998 or an internet stock in 2002 or a gold stock in 2004. But given that trading is often about doing what's difficult, I'm specifically intrigued by sectors chided by the public and avoided by the herd.
Roughly 20% of the world's shipping fleet is owned by Greek firms, making it an even more unlikely investment opportunity given the world's still moribund economy and bear market in shipping stocks. U.S.-listed shipping stocks are a virtual backwater, with a small number of billion-dollar companies among a long list of highly distressed and indebted microcaps, many headquartered in Greece.
Yet early indications suggest that could be changing. The Baltic Dry Index, an index of shipping rates, hit a one-year high last week before surrendering some gains on Friday. That's directly benefited companies like Baltic Trading (BALT),
Both the price action and my existing position have prompted my increased interest. Because markets tend to move in trends, strength in one initial names or indicator can be a harbinger of a bigger move. While still largely mired in a bear market, the sector has improved, and the fact I have existing, opening winning trades is reason enough to expand my position. Most investors end up taking their gains exactly when they should be expanding them: In blackjack parlance, "double down" when markets move your way.
Among the companies actually headquartered in Greece, there are two high-risk, lotto-ticket long shots which, like Baltic Trading, tend to follow the recently resurgent Baltic Dry Index. One is Excel Maritime Carriers, Ltd. (EXM),
The other, even more speculative play would be Navios Maritime Acquisition Corp. (NNA),
Although not headquartered in Greece, another speculative and leveraged play is Eagle Bulk Shipping (egle),
Jonathan Hoenig is managing member at Capitalist Pig Hedge Fund LLC. At the time of writing, Hoenig's fund may have owned shares of companies mentioned in this article.