market folly

We're posting up notes from the Ira Sohn Conference 2013 in New York.  Next up is a summary of the presentation from Tor Olav Troim of Seadrill (SDRL).  He presented "Opportunities in Cyclical Industries.  Some long ideas: Frontline, Seadrill, and global arbitrage on the gas market via Golar LNG (GLNG).


Opportunities in Cyclical Industries

Fredriksen's partner.  Long Ideas: They own: Seadrill, Frontline, LNG co, Shipping company. Claims they created $31B USD.

Long: Frontline. Showed how shipping rates collapsed in 2008, from $160k to $20k in three months! Value of a vessel went from $140M to $300k, effectively lost 99% of it's value. New ships have huge fuel savings, and they are cheap to build now. Can make back investment in 6-7 years.

Long: Seadrill. Drilling- "The best business we know!" Full pay back in 5 years on 30-year life assets. Showed charts explaining how 90 new rigs are needed by 2020. By having the rigs quickly available for the oil companies, they can speed up their payback by a year, which is a huge impact on rate of return. Possible to have a rig shortage, which is great for pricing. Sometimes the rigs have paid for themselves 3 times by 10 years.  Global arbitrage on the gas market.

Long: Golar LNG (GLNG). Profit is $30-50M USD per boatload to ship from Africa to Europe.


Check out the rest of the hedge fund presentations from the event: notes from Ira Sohn Conference 2013.