The Backbone of Global Trade. A Deep Dive Into Shipping.

Speaker A: Welcome to Investology. This episode will be a rare opportunity to understand shipping, an industry that is the backbone of their global economy. With my guest Pankaj Khanna, the CEO of hydmart, a NASDAQ listed company. Pankaj, welcome. Great to have you here.

Speaker B: How are you?

Speaker A: Very well, thank you. I know you're calling me from Athens, Greece that your company is NASDAQ listed and I saw that your educated in the uk. But could you start by giving us your background and a little bit of explanation about what Hydmar is?

Speaker B: Yes. I come from India. I started my career when I was 18 years old actually working on ships as a cadet. So I sailed for about seven years. I got my cheap license and then I moved to the shore side. I moved from India to the UK in 1996. 97. I did my postgraduate diploma in Chebe. Since then I've done various ship owning companies where I have worked oil tankers, so crude oil and petroleum product, liquefied, natural gas tankers, liquefied petroleum gas tankers, bulk carriers, other types of vessels. And I've also run a company which did ultra depot drillings. I got involved with Hydmar in 2019. In May of 19 became the CEO of Hydemar. Uh, in November 2020 I did a management buyout and bought out the company. Hydmar has been around for 41 years. When I bought out the company in 2020 we actually had shrunk a lot. We were down to six ships uh, under management and only six people. But Hydmar has a very strong brand name in the industry. So combined with my relationships and contacts and the Hydmar brand name, uh, we have basically grown the company back uh to today where we manage 65 vessels. Technical management and commercial management. Uh, we are based in now six offices around the world, 65 people. We manage tankers, everything from 8,000 ton ships all the way up to VLCCs which are 310, 320,000 dead weight vessels. Hydmar is uh, today what I would call a uh, one stop shop. So we provide marine services. We are not a ship owner. So we do everything from identifying what is a good project for a financial investor, helping them acquire the vessel. So we actually have a ship broker in house who helps the acquisition of the vessel. Then we provide financial uh, advisory where we uh, advise the client on where to do the financing and guide them to that. Then we do the corporate setup, we do the technical management. So we provide the crews and the management systems who run the ship. And then finally we Provide the employment of the business, commercial management. So the investor only needs to collect the money and monitor the inflows and take the decisions. And all the rest of the execution is done by us.

Speaker A: Okay, there's so many questions there, but this is fascinating. I mean, there's a lot going on in the history of the company, the services and your personal history. And I just want to touch a bit on that because you studied, you started as a cadet and then now you're CEO of a major company. Obviously not everyone becomes a CEO. But is the entry point the cadet to higher care or is yours totally exceptional in that respect?

Speaker B: Look, 95% of my peers, other CEOs have never been out at sea. I, um, am one of the few who actually has got to this point where not only that I am the CEO, but I own 45% shares of this company. Uh, there was another company called Pioneer that I founded. We invested almost half a billion dollars in rival carriers. So my career is a bit unusual. It's in some sense like a trailblazer. But this industry provides certain opportunities and I've been lucky enough to be at the right place, right time and have taken those opportunities as they came along.

Speaker A: Yeah, very interesting. You mentioned Norwegian, Norway, Greece. Those are countries that often come up. And as a Greek, there's also this kind of aura about the industry, right, where people might not be captains, but it's still like this thing about being at sea. What, what drove you to this in the first place?

Speaker B: Look, when I started the career way back in 1988, I actually wanted to go into the Indian navy and work in the forces. And then I did not get in there. And then there was a merchant navy. A friend of mine was going for an interview and he said, uh, oh, do you want to come along? So I just happened to go along as a ab me role. I got interested in the industry and he did not get in or stay in. And I did and I carried on, made a career offered. The good thing about shipping is that it's a global industry. Also, it's affected by macroeconomics. So it's not a niche industry in a little area. So I've lived in all the continents, I have worked in all the places, I have traveled all over the place. And even today I love what I do because it changes on a day to day basis. And the opportunities are humongous because we are talking about carrying oil and gas, we're talking about drilling for oil and gas, these kind of things that as human beings we cannot live without. And I think the events over the last couple of years have brought back the realization that all this thing that we talked about, renewables, et cetera. Yeah, that's all fine and I think it will come in sometime where renewables will be the thing. But without oil and gas, daily life in terms of basics of life cannot be facilitated.

Speaker A: Yeah, uh, fascinating. We only talk about shipping when there's a conflict. Like there was, there is, there was in Iran. But it's 80% of all traded goods by volume, which if you think about it carefully, it's mind blowing. And before we talk about the role in the global economy, et cetera, I wanted to try to, to get a better grip of what you discussed earlier about the management of tankers. Who are those investors who are looking into buying or I don't know if it's buying, renting a tanker and what's involved in all that? What are ships and what do we do with that?

Speaker B: Yeah. So, uh, let's start with what is technical management. Basically, technical management is the provision of crews on board. So obviously you have a ship, it has to be run by people, it's not run by AI, there's no automation as yet. We have about 22 people on board. So we provide the crews on board. The vessel has to have a ship management system, what's called sms. And so we provide this sms, we have a document of compliance. So effectively we provide the people that run the vessels and the systems that run the vessel. And that vessel basically then carries the cargo from port A to port B. And the cargo that we carry is either crude oil, all petroleum product. So after it has been refined and then the other business that we do is commercial management. Commercial management is the provision of employment. So Hydman has been around for 41 years. We have been KYC, know your client KYC, by every oil company in there on the planet and every trader on the planet. So when, if you want to go, take your $120 million ship and you go to Aramco, the Saudi national company, or you go to Exxon or Chevron and say, I'm Mr. X, I've just bought a ship and I want to carry your cargo from port A to port B, they will look at you and say, sorry, I don't know who you are and we cannot work with you. Your ship may be brand new, 120 million comes just straight from the shipyard. But we are ah, unaware of who you are. Aramco, um, uh, to do their kyc, if they decide to do the KYC on you takes 12 months. The same processes with Exxon, Shell, Chevron, BP, so on. Hydmar has been KYC cleared by every oil company in the world. We've been working with them for 41 years. So when an owner buys a ship and says, I've just bought this ship, I want the ship to earn money and you help us, Mr. Reitmart, to get the employment of the vessel. So we basically take a ship from the owner and we employ it with an oil company or a trader that we work with and then we charge a fee for doing that. So the same for technical management we charge a dollar per day fee. For the commercial management we charge a dollar per day fee. Plus we charge a percentage of gross commission, that's uh, of the gross freight. So let's say the freight today, I was just talking to my trader this morning and the freight today from Arabian Gulf to China is $35 million our commission, and that's on a very large crude carrier that would carry 2 million barrels of crude oil. So our commission on that 35 million is 1.75%. So if I run that 35 million at 1.75%, that's $100,000 is what our commission would be for that one fixture. Plus we would charge some dollar per day fees as well. So that's the business that we do primarily. Now we asked about who are the investors? There are two types. Mainly it's a financial investor that can be a high net worth individual, can be a uh, institutional investor, a fund that says, Okay, I have $200 million to invest and I want you to go out and find me good investments to put that in. It could be a sovereign wealth fund that wants to. And then on the other side are what are called strategics, ship owners, uh, guys who uh, want to become a ship owner. They are not necessarily uh, uh, in the business or could be in the business. They could be a dry cargo ship owner or a container ship owner that wants to get into tankers. So we assist them in acquiring the asset, managing the asset, finding employment for the asset. And then it could be owners that own small vessels. They own an Mr. Tanker of 40, uh, 5,000 deadweight. And now they've made money and they want to buy a bigger ship. So again we assist them in buying that larger vessel and managing that vessel. So effectively we are there facilitating people's investments uh, in uh, tankers. And that's our business today. But we are also uh, equipping ourselves to diversify in the future. We Will also do dry cargo vessels, we will also do container vessels, we are already doing some dry cargo vessels on the margin.

Speaker A: And if, let's say we take the specific example of a financial investor, maybe institutional investor, the rationale behind it is to say I want to allocate, I see an opportunity in this freight play. I've got money to dedicate to it, but obviously I'm not going to hire everyone and manage the. And that would be what? Then they come to you and uh, you do everything including finding the actual buyer and seller at root, is that it?

Speaker B: Yes, effectively for let's say a financial investor gets involved because the returns are very attractive, either the long term returns or depending on the time of the cycle, the short term returns can be very attractive as well. So they come in and say okay, I like the tanker sector, I like the returns over here, tell me which is the sector, which is the size to get into. So today I would say let's go buy out, buy a VLCC, a five year old very large crude carrier that can carry 2 million barrels of oil. A uh, five year old is worth about 140 million. Sounds like a lot of money. But on that $140 million ship I can fix the first voyage today at 35 million. That's the gross freight. Now from the 35 million if I take out the cost, the fuel cost, the port cost, etc, the net cost in the pocket of the owner is about net freight. Uh, in the pocket is $30 million. So on that $140 million shared, the can do one voyage of 40 days and you make $30 million in your pocket. If you are able to repeat this a couple of voyages effectively in three, four voyages you have made back like 100 million uh, dollars on $140 million shift. And that $140 million shift has a 20 year uh, remaining life. So in a matter of months you can make a huge returns. Of course this is based on today's market because there was a war in Iran, the Middle East Gulf was closed for quite some time. Freight rates are at super elevated level, at record levels. But even in the long term cycle there are very attractive investments in tankers. So that's why investors come to us and say hey, I like the sector, find me a good deal to do. I'm um, just preparing a ah, one pager for a fund based in the Middle east where I'm uh, recommending a small tanker. It's uh, a 38,000 deadweight tanker. They like older assets, less risk, don't want to take, put 140 million to work. The value of the asset is 12 and a half, 13 million. So I have tailored the.

Speaker A: So you're not just facilitating, it's also, yeah, tailoring, advising, et cetera. Because obviously it's, there's sheeps and there's routes and there's I suppose a lot of different options and uh, you translate it into a uh, risk and return profile. Right?

Speaker B: There is one. There's the inbound inquiry where people come to us and say, hey, I bought a ship, take the technical management, I bought a ship, take the commercial management. But I'm also creating opportunities by going to investors and saying, hey, there's an opportunity to invest in the sector in this size. Why don't you do that? And for that, everything that I do. So let's say this investor buys the ship for uh, 50 million. I charge 1% fee for doing the, for facilitating the purchase of the vessel. Let's say the financing on that ship is 35 million dollars. I charge 1% of the 35 million for facilitating the financing of the ship. For technical management I charge $500 per day fee. For commercial management I charge 1.25 plus the fee. Eventually when I sell the vessel, I charge a fee. So everywhere, wherever I touch this vessel in the cycle, I'm making money. So this is how we make money, we create opportunities. Besides just having inbounds from people who come and seek our services.

Speaker A: Yeah, no, I also understand it given the margin that there is on the core business because for someone who, like you mentioned, like uh, you make 20% or 25 or 30% in one trip, that's the big opportunity that you want to focus on. And then this 1% here and there that's facilitating and uh, letting you focus maybe on the bigger picture is from a total outsider it seems like, oh, okay, this is a no brainer. And that comes to my next question which again is a bit biased from a Greek perspective. And the, the idea of ship owners, right, that's, that's what we talk about and there's some very famous ones and um, Greece is known for that. But ah, there's this idea again, the captain, not necessarily on the overship, but captain of the company that owns the ship and manages everything. What you're describing is actually quite different from that. There's the separate, the ownership, the management, the different layers of management. You said commercial, technical, et cetera. And therefore rather than those who play this, they're ship owners because they own the ships, but they're more. They can be very astute investors who are not particularly, who don't have a particular affinity with ship owning, but see it as a financial opportunity that you need to uh, materialize physically or something like that. Is that a good way to describe it?

Speaker B: So look, in the old days, 30 years, uh, 40 years ago, you could be a captain on board a ship and come home and say, oh, I see an opportunity, I have a little bit of money, I will go to the bank, I will raise 98% of the purchase price in debt, sometimes even 105% in debt, and I will go buy a ship and I will start from scratch. And I know everything about the ship. So I will do the technical, I will do the commercial, everything will be in house. I will do the financing. This was the old days. Today with regulation, with the changes that have happened, consolidation, There is no room for a single vessel, vessel, three vessel, ship owner. There are people who own one to three vessels, but it's not efficient and you don't have scale, you don't have the attention of the financing community and uh, you don't have any pricing power. So you have to use consolidators like Hypar, uh, in the market who have scale. So you know, I'm running a 65 vessel fleet. I've been around for 41 years. When I pick up the phone to Chevron or to Exxon or Shell, he will talk to me because I am Hymar. I've been working with them for 41 years. If you are a single vessel owner and you pick up the phone and call Chevron, they'll be like, who, why, what should I. They will not even most likely pick up the phone. The industry has changed. It's no longer the romantic thing of those days are gone.

Speaker A: Yeah, that's my silly idea. But you know, I think it's still there somewhere. And uh, may I ask, Hydma called it Uber of shipping. And I think we've clear understood in the business model there's also uh, an aspect of technology which is very relevant for Uber because obviously it's not just that they have connected all the taxes, it's also that whatever, they have an interface and the, for the clients, for the tax, et cetera. And that's what makes a difference. That's also what probably allows them now to charge extra, but that's another story. But yeah, how's that so we understand the connection. How is the, how is the tech or other aspect of it that you provide to facilitate that?

Speaker B: Yeah, look we digitalized 20 years ago. We were at the forefront in the industry. We were the first operating platform that was set up 20 years ago in the industry to run tankers. So effectively we don't work and have not worked for 20 years in Excel or databases, et cetera. We have an ERP system. When a cargo appears, it is entered into our system. A vessel appears, it's entered into our system and from that point onwards everything is on the system. We run freight rates estimates, so we could be running five different cargoes for that one vessel to see which is the best cargo for us to take, how to optimize the voyage, what is the best, uh, earnings for that vessel, not just for that void, but for the next voyage, in the next void. So we plan for all of that on the system, all the operations, all of the voyage costs, all of basically everything that we do on the voyage is run on this ERP system. And then it goes to invoicing, then it goes from there, connects to an accounting system. So effectively all the data moves across to the accounting system, gets processed in the accounting system, gets back into the ERP system and then our clients, the owners basically get all their reporting on this system as well. So we don't email out any reports. Everything is online. And this has been done for the last 15, 20 years. It's not something that we did in the last five years. So this today we are sitting on 40 terabytes, maybe it's 50 terabytes today, about 50 terabytes of data going back 20 years, emails, structured data and unstructured data. So emails and various other things, filing systems and the ERP system. Now we are in the process. And the reason I'm so current on how much data we have is that we are just installing an AI based system on top of all this structured and unstructured data to basically help us optimize all our processes. We are not going to let go any people, but we're going to optimize our processes with AI so that all the processing, day to day work, verifying that the ship positions are correct, that the weather reported by the ship is correct, that the ships are following the right weather routes, etc. All of that will be done with the assistance of AI. This will free up uh, the people, the void managers, to help either make more money or save more money. So right now the guys are one small example. So if a vessel gets fixed, let's say it's fixed to Aramco for Russell Nurad, we have to clear the rest of the terminal requirements, blah blah. So an operator has to spend 2, 3 hours collecting all the documents, which are like 12, 15 documents, fill out some forms, draft up an email and send it out to the terminal. And that's just one. And he has to probably send five, six emails like that. So going forward the new system that we are installing is going to do all of that. The operator is going to set it up one time. Once it is set up going forward he will just click the button, send the report, uh, for Aramco to get the clearances, whatever. The system will draft an email, will put the email address in, will attach all the documents, will fill out the forms and then the operator only thing he has to do is review and uh, it will be sent out. The saving for the operator is like six, seven hours of work that will be down to five minutes. So he will or she will then have way more time to actually look at optimizing the voyage and making more money. So we are in the process of doing that and I just described one little function that we but optimization in terms of the best routes to take, the best weather, routes to take, what cargoes to take, optimization on legal side in terms of cases optimization for me as CEO in terms of running the

Speaker A: company, it's gonna that innovation is really fascinating. We hear a lot on the podcast as we discuss with a lot of investment technologists and therefore there's a lot of data and therefore there's AI and then there's AI agents as a natural evolution. And we see that it's happening in industry as well. And I'll get back to that and the outlook for the industry and the potential for innovation or even disruption. But first I wanted to get a more complete picture of the ecosystem. We mentioned already Headmart's central role, the ship owners and investors. But what is for example the role of traders?

Speaker B: So uh, traders in our business are almost synonymous with the oil companies. There's very little difference. Uh, the traders may not have as many producing aners or refineries but actually uh, the largest traders. So for example VTOL or Trafigura also own refineries, also may own producing assets. Uh, oil and gas are also involved in LNG now and then on the other side the oil companies are all also trading. For example Adnoc UAE oil company has a trader called admic. Uh Aramco, the national oil company of Saudi Arabia has a trading company called atc BP trades, total trades, everybody is trading. So I think the, the big difference between the traders and the Oil coast has faded a bit. Uh, however traders perform a uh, very important function in the industry where they are picking up the oil production from certain countries. So for example a lot of the production from Nigeria used to be handled uh, by the traders. In the past a lot of the Russian oil production was handled by the traders. Uh now when Iran is starting to export again under US general license again many people are hesitant to buy directly from Iran. So the traders will step in like Trafigura, Vital Mercury or whoever and then they will sell the oil on to other people. So traders have a very critical role. We work very closely with the traders. So both vital and traffic guru are one of our largest clients. Uh we do a lot of work with Mercura and also with a lot of the smaller traders as well. And traders basically facilitate uh, the market in terms of moving uh, oil. Uh we provide the freight but they provide uh, the uh, financing and the facilitation that other people cannot do. In terms of the futures market for uh, oil and the paper market, as you know, uh, the futures market is much larger than physical oil. On the freight side the futures market is not as big. We have used uh, the futures uh market and the bear market a bit. Uh but people come to us because they want exposure to the spot market. So they come to us because we are the Uber of juvet. So they want to have this port A to port B, maximum earnings. So they don't want to go and do the long term lease and be six months lease, 12 months or three year lease. That's why they come to us because over time the spot earnings are higher than the long term lease earnings. This has been proven through history. Uh this is our role, this is our expertise is to run.

Speaker A: Another aspect of shipping is its cyclicality. Can you expand on that and how the industry deals with it?

Speaker B: Look, uh, there's no demand for the ship per se, right? The demand is for the commodity. So we carry oil. Oil is impacted by geopolitics. There's no way around it. So effectively every Black swan event affects uh, oil prices, availability of oil, how much oil is exported and also in a certain sense affects the demand for oil. Uh so far demand uh for oil has been resilient and through all the crisis has never really come down as such. Uh has always continued to increase, uh, uh, the intensity of the global economy and the connection with the oil has reduced. So it's not as intensive as it used to be. But still uh, there is growth in population, there's growth in the World economy and it is connected with oil. So there is the oil cycle in terms of demand, uh, and supply. And then there is the ship cycle which is connected to the demand which comes from not just the volume of oil we move, but also the distance that we move. So imagine if uh, oil was being moved only from Iran to India, short voyage, very close to each other. Uh, so you need let's say 10 ships to do that. Now if that same amount of oil had to move, the voyage from Iran to India is call it seven, eight days. Now if the same oil had to move from Iran to Japan, which is a 30 day voyage, so it's four times the distance. Obviously you cannot do it with 10 ships anymore. Now you have to require, you need four times as many ships to move that same along the oil because the distance has increased. So this uh, is another factor that impacts uh, what we do. So there is uh, the route makes a big difference, the volume of oil that we move makes a big difference. And then of course, where that oil is coming from. In terms of cyclicality, the industry is highly cyclical with the oil. And then there are the number of ships available. Ship owners, when they make a lot of money, they want to renew their fleet. It's a depreciating asset. The life of the asset is about 25 years. Typically around 25 years is when a ship gets scrapped or recycled. And so that's the life of the vessel. Every shipping company typically depreciates, uh, the asset over 25 years. So you require new buildings to the new year fleet. And the timing of the new buildings is not tied exactly to when the ships are returning. 25. So depending on the cycle and how much money people have, they go out and order ships. And that can create an imbalance in the fleet demand and supply. And that also creates opportunity in terms of cyclicality. So the industry is highly cyclical. So how to get around the cyclicality is that make sure you buy low, you sell high. That's number one, the most important principle. But even more important than that is your balance sheet. So if you are going to take on a inordinate amount of leverage or debt to finance your ships. First of all, if you buy at the high point and you lever up at a very high level, you have created your own debt trap. And this is when companies go bankrupt, where they buy assets at super high values, they put on 70, 80% leverage, market comes down, uh, the banks are now knocking at their door saying, hey, you are in violation of your asset governance. And then of course cash flow also comes down and now you have to service this huge amount of debt. Uh that's when companies go bankrupt. The good companies, which last two cycles, which there are many of now, uh, because the companies have become very strong, have paid down a lot of debt, are actually today carrying debt levels of 20, 30%. So the debt is at very, very low levels as compared to historical past. The average debt companies carry to a generally between 50 to 60%. So the debt is very low and uh, they're cash rich. Uh most of the oil, the shipping companies in the industry are sitting on 1, 2, 3, 4 billion of cash. They may not be sitting just on that balance sheet, they may have dividend out there may be private ship owners who have put it somewhere else. But effectively they have made that kind of returns over the last five years. So the industry insulates itself by having lower leverage, uh, and having strong balance sheets. So this is the key to survive because in shipping you need to be around, the cycle will turn. If you are in the low cycle, the cycle will turn up and at some stage the uh, up cycle will turn down. So you want to be there in both those cycles because when the cycle is up obviously you want to make the most amount of money. But when the cycle is down you need to have cash so you can buy assets at that low point of the cycle.

Speaker A: And why is Hydmar's perspective on this cyclicality now?

Speaker B: So firstly Hymar has zero debt, so we have no leverage whatsoever. Number two, we have zero capex. So my business does not require any capex whatsoever. So you know people say Hymar is asset light. We are not asset light, we have no assets. So other than having DEs and PCs etc, we have no assets. We don't own any offices, nothing. So to grow, for example, I have marginal cost but I have no capex. Uh, I need to. So for every ship that comes in, if I need additional people then I get people only if I have additional ships. So basically the income that is coming in funds, uh, the growth and also my working capital requirement is virtually zero. So the business self funds from the fees which are coming in. Uh, so that's one critical factor. And where we are different from our clients, our clients are the ones who are exposed fully to the cycle because they're making large capex investments in buying vessels and so on. We are providing services. So regardless of where things are in the cycle, we make our fee, we make more money in the upcycle where the rates are super high so it

Speaker A: doesn't look like it's an industry that's about to be disrupted fully by AI. But, um, the efficiency of the process and the way people operate could still change dramatically. Right?

Speaker B: Yeah. So the industry is very, uh, capex heavy. So in today's market, if you want to buy the vlcc, like I said, a new building VLCC could be as much as to go in order today is $130 million. And you get it in 2029. Uh, ships which are on the water could be as much as 160, $170 million. And that's for one. So when you are in that industry, maybe we'll inform your decisions better so that you will have more visibility. The data is already there, but you will have more analysis, more visibility on the cycle going forward. But, uh, the catch is there you cannot avoid the capex. So I don't think AI disrupts our business, if anything. Actually, what has happened with the war, what has become clear is that the countries require diversification of oil supply. Japan was importing 95% of their crude oil from the Middle East. It's an unsustainable position as a CEO for a company. If you, if I went out and told an investor that I'm importing 95% of my energy from one source, their investors would look at me and say, why do you have so much concentration risk? But Japan has been doing it till today. So Japan has to diversify their sources of crude oil imports. So if they don't get it from the ag, where are they going to get it from? They have to go to Guyana, to Brazil, to the US Gulf, to West Africa. All sources which are further than the Arabian Gulf, uh, that will lead to longer distances, more demand. The other aspect is storage. Most people have realized, most countries have realized in Asia especially then they didn't have storage. The only two countries in Asia that had adequate storage was Japan and China. China sold a lot of their oils which they bought at like 50, 60 bucks, at 120, $140. Japan released a lot of that oil into their domestic markets and some in the international markets, but the rest of the countries had no storage. So they had fuel rationing, shortages, etc. So all those countries now realize that they have to build some storage. And China and Japan that use the storage also have to rebuild storage. And not just the US Crude oil stocks today are down to levels last seen in the early 1980s. We have not seen these levels for all those years. Stocks are going to get rebuilt as well. So over the next 12 months we expect that there is a very strong upcycle for oil tankers because there will be increasing distances and also uh, increase demand because uh, storage needs to be rebuilt and additional storage needs to be built.

Speaker A: What are some typical misconceptions about the shipping industry?

Speaker B: People, uh, let's say some investors, they got a bit jaded because uh, the shipping markets were stagnant through the, let's say from 2015 to 2020. There wasn't a lot of excitement uh, in shipping. But then Covid happened. Dry bulk containers, uh, uh, and tankers since the Ukraine war started, have made, you know, the only way to describe it is a crazy amount of money. And so the interest is come back. So invest. The industry is volatile and it's across the board. Whether it's tankers, bulkers, containers, chemicals, whatever, uh, it is cyclical. But uh, there are very strong companies in there as well. So uh, there is always a time to invest depending on uh, when it is. But investors today, especially in the public markets, the institutional investors are looking for large companies and want to do uh, big things. But shipping does not offer that. So that's why I think shipping is

Speaker A: more for what's the most common mistake you see or what's the typical pitfall in their traditional approach of outsider investors when they come into the industry.

Speaker B: So I think uh, it's uh, what I would say, you know, you have to identify companies which are value investments so that you hold for the long time. And then there are the trading plays that you know, you play the cycle and identifying that is critical because if you get into uh, a cyclical short term play, trading play, and you think it's a value investment and you hold on for too long, you lose a lot of money and then you say well shipping is bad. No, if you know that it's a cyclical trading play, then you know that you get in, get out is not a long term hold. On the other hand, if you identify that this is a good management team, their business model is good. This is a value investment that over time could really work out. There have been companies that have returned 4, 5, 6x in Japan. So I think what people get wrong is really identifying a cyclical trading play versus a long term value investment. I think that is the critical differentiation.

Speaker A: Thank you so much. I think we've covered a lot and it's been a masterclass in how this industry that is so important for the economy and financial market works. Is there anything else you'd like to add?

Speaker B: I just want to say on Highmark, people should be aware that, uh, there is no. Because we have no assets, we don't have any net asset value. So you cannot value my company versus net asset value as people do with Shepherd. So we are valued on multiples of our EBITDA or net income, which is the same. Uh, so we expect that we will have both growth in our EBITDA and also growth in the multiple, uh, expansion. Because my peers that don't have assets are trading at 15 to 25 times, I'm only at 5, 6 times. So even if I can get to 10 times, that's expansion in the multiple. And at the same time we are growing and the EBITDA is growing. So I think that's something to watch out for.

Speaker A: Do you think typically people misunderstand or misclassify your company and therefore the way the market prices it, uh, assets are

Speaker B: trading at 15 to 25 times. I'm only at five, six times. So even if I can get to 10 times, that's a huge expansion in the multiple. We don't have comms. So people look at uh, the industry and start to look at shipping and say, oh, you know, Hidemar Shipping. It's like, well, yes, we are a, uh, shipping related company, but what we do in terms of services is different. So I think that's why I'm always talking to like, uh, generalists, not just to shipping investors, because shipping investors gravitate towards net asset value. You know, they look at assets, they want to value the asset, they want to do the breakup value of the company. This does not apply to Hydra. So, uh, this is something that I'm trying to, uh, you know, get out there as a message, uh, all the time.

Speaker A: Pankaj, I'm so thankful for your time. I've learned so much and I'm sure our listeners too. And we'll put all the links in the description for people who want to find out more about you, about the company, about the services that uh, you can offer and how to get a better understanding and how to get a piece of the action as an investor. Thank you.