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Breakwave Advisors: Profiting from the coronavirus

One man who has profited tidily from the turmoil seen in the dry bulk markets this year is John Kartsonas, the founder of Breakwave Advisors, the creators of the Breakwave Dry Bulk Shipping ETF (BDRY).

The exchange-traded fund (ETF) launched two years ago and owns and tracks bulker freight futures, which have been in ever greater demand in the first two months of 2020 both in trading volumes and assets under management.

“Trading volumes are up at least seven-fold as compared to last year, while assets under management are up nine-fold since the beginning of the year,” Kartsonas reveals in an exclusive interview with Maritime CEO. Increased interest, Kartsonas says, is in no small part down to the coronavirus.

“Given that other major asset classes have been only mildly impacted by the epidemic while shipping is close to record lows, investors view such a discrepancy as an opportunity to invest in a potential recovery as the epidemic eases,” Kartsonas says, adding: “Shipping is cyclical, and any improvement in fundamentals can lead to a sharp increase in freight rates, which in turn will have a positive impact on BDRY.”

New York-based Kartsonas’s impressive CV helps explain the success of his fund. Starting out with S&P Global Ratings 20 years ago, Kartsonas moved on to Citi, then Sea Advisors Fund and a six-year stint at the Carlyle Group before creating Breakwave Advisors.

Kartsonas and his team are predicting a strong bounce back in shipping volumes, starting sometime over the next two to three months as the virus eases.

“The accumulated demand for transportation is significant and will coincide with seasonal pick up in activity. An inventory rebuilding cycle for bulk commodities could further boost volumes, aiding mainly tankers and dry bulk,” he says, predicting a “sharp” rebound in freight rates towards more sustainable levels in term of cash breakevens.

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