TRMD - Dividends Matter: Tanker Trade Post-Mortem And Total Return Review

• This review will function as a post-mortem of the popular spring 2020 'tanker trade' or 'floating storage trade.' We review performance as well as dissect which types of firms outperformed.
• In market theory, dividends are simply an allocation of capital and shouldn't determine multiples; in practice, dividends are a very important determinant for valuation multiples and trade performance.
• This brief case study reinforces this fact by examining the performance of tanker stocks from mid-March to 30 September. Dividend payers massively outperformed non-payers.
• Relative valuations, balance sheets, market capitalization, and corporate governance all had minimal determinacy on performance.
• The tanker trade was awesome (+33% median return in 2 months, while the market was negative), but longer-term allocations did poorly. More commentary below.

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