3/22/2026
Activists Target Japan’s Shipping Stocks on Rising Vessel Prices
Bloomberg (03/22/26) Tsutsumi, Kentaro; Du, Lisa
Investors are piling into Japanese shipping stocks as limited shipbuilding capacity and elevated freight rates boost the value of their fleets. Elliott Investment Management LP said earlier this month that it has taken a “significant” stake in Mitsui OSK Lines Ltd. (TYO: 9104), adding that “the market materially undervalues the business.” This follows a similar move by investment firm Fuel, which built a stake of about 5% in Tamai Steamship Co (TYO: 9127). Vessel prices, which have been trending upward globally, driven by robust demand, inflation and limited shipbuilding capacity have also been lifting unrealized gains of shipping fleets. The war in the Middle East has also lifted freight rates. Large tankers with an age of 15 years are now valued at around $78 million — up 39% this year and are at the highest level since records began in 2013. Elliott believes Mitsui OSK should sell off its property assets or seek a relisting for its real estate subsidiary, Daibiru, in order to improve its valuation, according to people familiar with the fund’s thinking. Additionally, Elliott is also focused on the potential gains to the company’s capital efficiency from selling and leasing back some of its fleet, the people added. The U.S. fund believes the market value of the vessels Mitsui OSK owns are worth more than double their book value of 1.3 trillion yen, the people said. Good quality, Japanese-built used vessels command high prices, and transport disruptions due to the Iran war have further boosted valuations of large tankers, said Veson Nautical Corp. analyst Rebecca Galanopoulos. Bulk carriers are also valued at a record $34 million on average, according to data compiled by the U.S. shipping solution firm. “Dry bulk carrier prices are at historically high levels, and the company should consider realizing paper gains through measures such as leasebacks,” said Yushun Ozawa, CEO of investment firm Fuel, referring to Tamai Steamship. Ozawa added that even excluding unrealized gains on vessels, the company’s equity ratio is excessively high. Activists have long maintained that Japanese equities are undervalued, taking into account assets such as real estate, cross-share holdings and cash. Investors are now starting to focus on shipping assets. Hibiki Path Advisors, which has raised its stake in Tamai Steamship to around 9%, said in a letter that the firm’s after-tax unrealized gains on vessels totaled an estimated ¥3.7 billion as of last September, implying the stock is deeply undervalued. Zennor Asset Management reported a 5.05% stake in NS United Kaiun Kaisha Ltd. (TYO: 9110), according to a filing to Japan’s Finance Ministry. Other activists that have recently invested in shippers include Hong Kong-based LIM Advisors Ltd., which disclosed more than a 5% stake in Inui Global Logistics Co. (TYO: 9308) last month. U.S.-based Miri Capital Management LLC also holds over 8% of the company’s shares. The extent to which paper profits can be realized at a large scale is uncertain. Unlike securities or real estate, vessels are core operating assets for shipping companies. And yet investors remain attracted to the sector as shippers often sell or replace aging vessels. And despite the rally in shipping stocks, they believe the elevated ship valuations, are not being accurately reflected in the share prices. Earlier this month, Iino Kaiun Kaisha Ltd. (TYO: 9119) said it expects to book a ¥6.9 billion gain from the sale of a large crude tanker in the next fiscal year—equivalent to nearly half of its projected net income for the current year. The company cited more effective use of management resources and improvement of capital efficiency as reasons for the deal. “For companies with extremely low capital efficiency, unrealized gains on vessels can serve as a point of entry for activist investors,” said Daisuke Uchiyama, senior strategist at Okasan Securities Co., adding that the highly fragmented industry is ripe for consolidation.
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