MEMO TO CLIENTS:
The "Easy Yield" Is Gone. We Are Now Trading Scarcity and Survival.

In our observation of market cycles, the one constant is the pendulum. It swings from euphoria to depression, from underpricing risk to overpricing it, and—most relevant to today - from an abundance of capital to a scarcity of assets.

The shipping dividend narrative has fundamentally shifted. The pendulum has swung away from the easy 12%+ yields available in 2024 from Star Bulk Carriers (SBLK), which were born of cyclical freight rate peaks. Those yields have evaporated. Current market yields reflect not the peak-cycle distribution expectations of the past, but the structural reality of a new shipping regime: one where scarcity of vessel supply, not abundance of earnings, drives equity returns.

Investors today must make a critical decision, one that separates the "first-level thinker" from the "second-level thinker": Do you chase yesterday’s phantom returns, or do you position for structural asset scarcity driving multi-year rate premiums and capital appreciation?

EXECUTIVE SUMMARY:
THE CASE FOR SUPPLY CONSTRAINTS

The shipping industry presents a compelling investment opportunity, but not for the reasons the crowd believes. It is driven by structural supply-side constraints, not dividend yield maximization. Our bullish thesis rests on three unambiguous pillars, which we view as the "inevitables" of this cycle:

1. The Replacement Cycle: A decade-long necessity to replace aging vessels.
2. The Bottleneck: Unprecedented global shipyard capacity bottlenecks extending delivery dates to 2027-2029.
3. The Geopolitics: Disruptions elongating voyage distances and sustaining elevated day rates.

In this briefing, we abandon the generic "buy all shipping" recommendations. That is a blunt instrument. Instead, we assign each investment a specific strategic mission: