Stockholm (HedgeNordic) – Shipping specialist Joakim Hannisdahl has set sail on his own with the launch of a new long/short shipping hedge fund under his asset management firm, Gersemi Asset Management. Having worked in equity research in shipping for a number of years, Hannisdahl aimed to become the world’s top shipping analyst and leverage his experience to enter the investment management arena.
Starting as a shipping analyst at Nordea in mid-2011, “my plan was to become the number one ranked shipping analyst and then use that as a platform to get into the fund management industry,” according to Hannisdahl. After achieving the top rank as a shipping equity analyst on Bloomberg and co-founding and managing a shipping long/short equity hedge fund with investment bank Cleaves Securities, Hannisdahl has now launched his own fund under his independent investment firm. “Now I have full control of the structure, so I can ensure that the investors’ best interests are always the first priority,” he explains.
“The strategy has worked very well, so there is no reason or incentive to undergo any changes to my approach.”
For his newly launched Gersemi Shipping Fund, Hannisdahl will continue to employ his proven and time-tested investment approach. With an annualized return of 32 percent since 2017, he sees no reason to change the strategy. “The strategy has worked very well, so there is no reason or incentive to undergo any changes to my approach,” says Hannisdahl. The approach involves a predominantly long/short equity strategy to capitalize on the cyclical expansions and contractions in various shipping segments, including dry bulk, oil tankers, car carriers, LPG carriers, LNG carriers, and containers.
Understanding Cyclicality of Shipping Segments
“My comparative advantage has been to apply mathematics to the cyclicality of shipping and being able to forecast the cyclicality. So there is no change to that,” Hannisdahl elaborates on the investment strategy. “I still believe I have the same ability and that will be the main strategy of the fund.” The investment process starts by understanding the cyclicality of each shipping segment and the stage of each segment’s cycle. Hannisdahl then goes on to identify the investment classes or instruments that allow him to best capitalize on a given stage of the cycle. “We mainly invest in equities, which is the backbone of the fund, but we can also invest in bonds, mezzanine, and derivatives such as forward rate agreements.”
“My comparative advantage has been to apply mathematics to the cyclicality of shipping and being able to forecast the cyclicality.”
In terms of equity selection, which represents the backbone of Gersemi Shipping Fund’s portfolio, Hannisdahl employs a bottom-up selection process that considers different characteristics based on the shipping segment and its stage in the cycle. “If we identify equities as the best way to expose ourselves, we then come down to the company level,” says Hannisdahl. His investment universe covers all listed shipping companies globally, filtering out certain companies due to corporate governance or other issues.
The characteristics Hannisdahl focuses on depend largely on the stage of the cycle in a particular market. During the trough of the cycle, the emphasis is on balance sheet strength. “In the trough cycle, you need a company that is able to survive because the trough might be longer than you initially think,” says Hannisdahl. “When the cycle progresses to more mid cycle, as we are now, and cash flow improves, the preference pivot toward more financial leverage and operational leverage, for example, companies with spot exposure and a good portion of debt on their balance sheet,” explains Hannisdahl. This approach aims to capture rising asset prices and earnings multiples in the growing market.
“There are a lot of considerations we are taking into account,” summarizes Hannisdahl. There is also a continuous process of assessing pricing changes, which can trigger the shipping specialist to reallocate capital between companies intra-segment while keeping the allocation to the segment unchanged. “If pricing changes for the whole segment, we obviously would look to potentially change our allocation to the segment.”
“In shipping, with experience and with a network, you are also able to do a little bit of trading gains on the information flows.”
The experience and network within the shipping sector also provide Hannisdahl with an information advantage, enabling the fund to generate returns through more opportunistic trades. “In shipping, with experience and with a network, you are also able to do a little bit of trading gains on the information flows,” says Hannisdahl. “Information flows in shipping are asymmetric, so it can take some time before certain data points are priced into the market. So there are some possibilities to trade,” he elaborates. When Russia launched the war in Ukraine in early 2022, Hannisdahl had already prepared a plan on how to position and reposition his portfolio. “Generalists often have to spend a day just to talk to analysts and understand what the implications are for shipping stocks.”
The Early Days of Gersemi Shipping Fund
Gersemi Shipping Fund officially launched on Wednesday last week, with the fund still keeping doors open to its Founders’ share class until August 1. This share class offers a rebate structure, with a fixed annual management fee of 1.5 percent and a performance fee of 15 percent for the first year, followed by 1.75 percent and 17.5 percent in the second year. Starting from year three, the fee structure follows the standard 2-and-20 model. Hannisdahl has already started to deploy capital based on his optimistic views on dry bulk shipping and oil tankers.
“There are a lot of considerations you need to take into account in today’s environment, but in my opinion, this just creates a lot of new opportunities.”
Currently, the fund holds 31 percent of its long exposure in dry bulk shipping and 20 percent in oil tankers. “We expect to increase our long oil tanker exposure going forward, but as the recent share price rally is unsupported by spot earnings and short-term market dynamics, we are pragmatic regarding our entry point,” says Hannisdahl. Looking ahead, there is always a lot going on in shipping markets, especially this decade with new regulations on emissions and efficiency regulations. While these regulations introduce new considerations, they also create opportunities for investment. “This creates a lot of opportunity. There are a lot of considerations you need to take into account in today’s environment, but in my opinion, this just creates a lot of new opportunities.”