The Shipping Dilution Machine May Be Breaking
I think there’s a massive distortion forming in maritime equities.
Ships are getting scarcer and more expensive, while some deeply discounted Greek shippers have created enormous amounts of shares, warrants and other claims to fund expansion.
That creates a problem.
A shipping company’s stock is part of its acquisition currency. At NAV, raising $100M is manageable. At 5% of NAV, you have to issue vastly more equity for the same $100M. At 1–2%, the math gets ridiculous.
TOPS shows it perfectly. Reported NAV grew from roughly $289M to $359M, while fully diluted NAV per share fell from $45.13 to $12.49. But here's the kicker, I estimate TOPS around $700–800M NAV based on the current price of ships. That's a potential increase of 100% since JULY of this year.
This trend exists amongst a cluster of Greek stocks.
The company became more valuable while each individual claim on that value became nearly worthless.
When you issue stock at extreme discounts, it’s like printing more dollars when your dollar is already worth nothing. Eventually those shares don't buy much anymore—especially when the ships you're trying to buy keep getting more expensive.
I’d even argue there’s evidence the explosion in ship values is partly tied to billions of shares being issued at pennies on the dollar. They’ve diluted their own purchasing power to the point where it takes an absurd number of shares to buy the same scarce ship.
At some point, you’re not just diluting shareholders. You’re diluting the currency being used to finance the shipping ecosystem itself.
But there is hope...
If rebuilding that purchasing power becomes more useful than destroying it, the incentive flips: close the NAV discount, raise equity at much higher valuations, and eventually potentially issue at a premium.
That’s the inflection point I think we’re approaching. Thats why I remain bullish.