MC SHIPPING, Inc.

What is managed like a sector fund, yields like a municipal bond and is priced like an at-the-money call option? If you chose the equity of MC Shipping (symbol MCX) you would not be far off course. Like the mutual fund, MCX diversifies its holdings over many shipping sectors. Like the muni, the stock’s yield is about seven percent. And like the neutral call, the price is modest and downside risk limited.

MC Shipping’s common stock is actually none of these, of course. For starters, diversification across sectors in an industry high in covariance has not shielded the equity from market risk. As the company approaches its tenth anniversary in a depressed shipping climate, its stock is trading at USD1.25-USD1.50, a mere tenth of the initial offering price of USD 15 per share in May 1989. Nor is the current dividend of ten cents per share anywhere near as secure as a bond coupon. Last year the dividend was sixteen cents, but in two of the past five years the pay out was omitted entirely. Perhaps comparison of the equity to a call option is the closest fit, at least at current price levels.

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