Portfolio Manager Insights

Oil tanker stocks offer a cargo load of opportunity

Oil tanker stocks have charted a course toward healthy dividends, a stretch of recent outperformance and compelling upside potential, according to Fidelity’s Adam Kramer.

By: Adam Kramer
Updated: 11/17/2025
  • There are several reasons to be optimistic about oil tanker companies, says Fidelity Portfolio Manager Adam Kramer, who believes energy transportation firms that ship oil and refined petroleum products throughout the world are well-positioned to pursue long-term outperformance across a variety of market backdrops.
  • “For roughly two decades, oil tanker companies were largely overlooked, weighed down by boom-and-bust cycles, speculative purchases of ships and excess leverage,” says Kramer, who manages Fidelity Advisor® Multi-Asset Income Fund. “But today, the tide has turned. These businesses are now well-positioned, having embraced capital discipline, streamlined operations and reduced debt, all while delivering outsized dividends.”
  • In managing the flexible income-oriented strategy since 2015, Kramer, alongside Co-Managers Ford O'Neil and Ramona Persaud, invests tactically across a broad spectrum of income-producing securities, ranging from investment-grade bonds to dividend-paying equities.
  • “I believe the lack of attention to oil tanker companies is a big reason why these stocks have been undervalued, and why investors with the resources and knowledge to really dig into the category, as we do, have a compelling opportunity,” he says.
  • Kramer notes that these businesses have typically been considered an effective hedge against geopolitical turmoil because trade disruption requires longer, higher-revenue shipping routes. But, less intuitively, he believes these companies could be well-positioned to benefit even if peace prevails.
  • “Such conditions could lead to the lifting of economic sanctions, and formerly isolated oil-producing countries likely would turn away from older, obsolete ships and toward newer models,” he explains. “A tightening of the market for modern, environmentally compliant vessels could benefit high-quality oil tanker companies, including those we’ve prioritized in the fund.”
  • Kramer points out that over the past five years, many of these firms have strategically reduced debt to near fleet scrap levels – creating leaner, more resilient balance sheets – while also lowering their free cash flow breakeven to trough levels, a rare trait among cyclical businesses.
  • As of August 31, four oil-tanker stocks represented about 13% of the fund’s equity assets: DHT Holdings (based in Bermuda), Scorpio Tankers (Monaco), International Seaways (New York) and Frontline (Bermuda).
  • “We believe each is well-positioned based on company-specific fundamentals, as well as tailwinds boosting the oil tanker industry,” he concludes.
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Cyclical Equity Industrials International
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Fidelity Advisor Multi-Asset Income Fund (FAYZX)

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