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Shipping ETF Crumbles On Teekay Dividend Cut

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Teekay Corporation ( TK ), the leading marine energy transportation company, was the worst stock performer on the New York Stock Exchange in the Thursday trading session as the stock tumbled as much as 62%.

The steep decline for this crude oil shipper came after the company slashed its dividend by 90%. Teekay will now pay 5.5 cents in quarterly dividend per share instead of 55 cents paid in the third quarter of 2015. The reduced dividend is payable in February 2016. The move came amid the need of funds to meet capital requirements for future growth projects and reduce debt levels (read: No Danger from COP21 for Airline and Shipping ETFs ).

Shares of TK hit a new one-year low of $6.65, reflecting a decline of 87.4% from its 52-week high price. The stock trumped its average volume figures, as more than 29.9 million shares moved hands compared to just 1.2 million on average per day. Teekay's master limited partnerships (MLPs) Teekay Offshore Partners ( TOO ) and Teekay LNG Partners ( TGP ) also tumbled 51.8% and 51%, respectively.

Market Impact

The news heightened worries in the shipping industry, which is already feeling the weight of the weakening global energy market. This is especially true, as it has resulted in a huge sell-off in shipping stocks, reflecting pessimism across the broad industry. In particular, the fellow shipping rival GasLog ( GLOG ) plunged 22.6% and its MLPs - Golar LNG Partners LP ( GMLP ), Golar LNG Ltd. ( GLNG ), and Gaslog Partners LP ( GLOP ) fell 29.6%, 14.3% and 10.7%, respectively (read: No High-Yield Relief for MLP ETFs Post Fed ).

The shipping stocks with double-digit declines include International Shipholding Corp ( ISH ), Capital Product Partners L.P. ( CPLP ) and Knot Offshore Partners LP ( KNOP ). Other notable decliners are Tidewater ( TDW ), Scorpio Tankers ( STNG ), Seaspan Corp ( SSW ) and Kirby Corp ( KEX ) each losing 9.9%, 5.9%, 5.2%, and 5.2%, respectively.

As a result, the Guggenheim Shipping ETF ( SEA ) touched a new record low of $12.11 at the close, plunging 8.2% on the day on elevated volumes of more than two times.

SEA in Focus

The product tracks the Dow Jones Global Shipping Index, which measures the stock performance of high dividend-paying companies in the global shipping industry. Holding 26 securities in its basket, the fund is guilty of concentration on the top two firms - AP Moller and Nippon Yusen - with 20.1% and 10.7% of the assets, respectively. Other firms hold no more than 6.62% share (see: all the Industrial ETFs here ).

In terms of country exposure, United States takes the top position with 36.4% share, closely followed by Denmark (19.1%) and Japan (13.5%). Currently, the ETF is under-appreciated and unloved as indicated by its AUM of only $30.3 million and average daily trading volume of just under 51,000 shares. The product charges 65 bps in fees and expenses.

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TEEKAY CORP (TK): Free Stock Analysis Report

GUGG-SHIPPING (SEA): ETF Research Reports

GASLOG LTD (GLOG): Free Stock Analysis Report

CAPITAL PRODUCT (CPLP): Free Stock Analysis Report

KNOT OFFSHOR LP (KNOP): Free Stock Analysis Report

TIDEWATER INC (TDW): Free Stock Analysis Report

SCORPIO TANKERS (STNG): Free Stock Analysis Report

SEASPAN CORP (SSW): Free Stock Analysis Report

KIRBY CORP (KEX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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