Still slippery, still BWET

Revisiting the crazy call from last winter that is still paying off.

One of my first posts of the year was written to highlight what I thought was a then crazy notion that we would have a short time to take advantage of the wild increase in pricing for the shipping futures market, specifically for the channels around Africa and to Asia from the middle east.

In this post…

… I explained my rationale for jumping in and for basically, setting a trailing stop because I knew the party should eventually come to an end. Well… that was February and now its August, and we are still trying to figure out the Iran war, and that means there is still a premium on boats carrying oil through the Strait.

What has this meant for the little darling ETF that I discovered in late January and took a chance on at around $40 in mid February?

See for yourself. Yesterday it peaked at $370! More than 10x from when I found it and more than 7.5x from when I wrote that this frothy market would not end anywhere good and to take the money and run.

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Which I did! Eventually, I think somewhere in the high 100s, my trailing stop triggered and I just monitored from a far. As we went into the ceasefire, I saw how quickly it could fall and that gave me some confidence that my theory about the volatility of shipping lane futures was correct. That said, what do I think now? Would I jump back in?

Short answer is no. It’s also yes. We still have limited transits, and we will have a backlog of demand and supply for some time. Getting oil back into the supply chain will mean elevated VLCC fees for a while. However, its just too far gone for me at this point. I love to chase a ghost but this is now a 10x winner and I have been out since it was about 3-4x. If it had an options market, I would be looking for puts in 2028 :)

Not really, that would be silly.

What was the point of my revisiting this today?

It was really about reminding myself to stay on something when you find it. If you look at Micron, Lumentum, or many of the others that went nearly vertical at times over the past couple of years, they share something in common with BWET. People got in, rode the rocket for a bit, and then took profit and thought that was it. I don’t think that should always be the end of the story. If the fundamental rationale for the crazy lift still exists and it isn’t a “WallStreetBets” style meme stock. Maybe take a look at kicking the tires before walking by.