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Why Does Oaktree Like Shipping?



August 07, 2013 – Comments (0) | RELATED TICKERS: OAK , CPLP , SBLK

Board: Value Hounds

Author: Hohum777

Over the last few years, Oaktree Capital seems to really have taken a liking to shipping:

- Go back three years, Oaktree was bailing out Beluga Shipping, a heavy-lift shipping company.

- Go back two year ago, Oaktree was taking a stake in General Maritime, and attempting to help
that company avoid bankruptcy. When that didn't work, they poured more money into General Maritime, and took control of the entity.

- Last year, there was Rickmers, a container vessel operator. Slightly different tactic was Oaktree's
investment in Capital Product Partners (CPLP), a tanker company that is slowly morphing into a mixed
fleet shipping entity. Oaktree Capital was among the investors who opted to invest in a new
class of shares- class B shares (preferred shares.)

- Last year Oaktree was also involved with dry bulk shipper Eagle Bulk.

- In 2013, Oaktree has invested directly in shipping, and buying vessels outright from troubled
Danish tanker company, Torm AS.

- Today, I came across this story on Starbulk (SBLK), another dry bulk shipping company. New
infusion of capital in SBLK gives Oaktree an 18.6% stake, and a board seat

I've owned SBLK shares in the past. The company had interesting origins- it came into being
from a Special Purpose Acquisition Corporation (SPAC). SBLK started with a fleet of very old
Cape vessels and somewhat newer Supramaxes in 2007. Since then, SBLK has upgraded its Cape vessels, selling the older Capes and replacing them with newer second-hand Cape vessels, and also ordered two new Cape vessels. I had the misfortune of owning SBLK shares right before dry bulk shipping's miserable decline began. After I closed my position, there was a short-term bounce in 2009, but the last few years the price trend has generally been down.

I am aware of SBLK's details at a cursory top level e.g. the fleet, most recent share offering,
& ordering new vessels. I might have to dig into this company again, and see if I can figure out
why Oaktree Capital found Star Bulk interesting enough to acquire an 18% chunk. FWIW, the prior
link also mentions Monarch with an 18.6% interest. Different investor or same investor?

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