Private equity fund Schroders' latest share purchase in dry bulk and product tanker carrier Norden - a move that brings the fund's total stake past five percent and thus makes Schroders a major shareholder - is a sign that the share has become too cheap, and that the company's dry bulk business can now be acquired at virtually no cost, says Nordea senior analyst Stig Frederiksen.
"This move indicates an investor who thinks that Norden has become too cheap. Looking at the average tanker asset values in Norden's own tanker fleet, compared to the current share price, one would get the carrier's dry bulk business for free. As such, the risk of a downside is limited, when one doesn't pay anything for it. It's basically a free option for Norden's dry bulk division right now," explains Stig Frederiksen, adding that Schroder's investment in Norden looks fairly long-term, likely to last a few years.