Viking Raid
Praise for The Shipping Man
…To Wall Street
Copyright
About the Author
With Thanks
Introduction
Quote
Dedication
The Viking Law*
Chapter 1: Navigating the Shipowner’s Aegean Haven
Chapter 2: Hilmar Reksten
Chapter 3: The Greek Spirit
Chapter 4: John Fredriksen
Chapter 5: The Future of Swashbucklers
Chapter 6: Tung Chao Yung
Chapter 7: Playing Hunches
Chapter 8: Daniel Keith (D.K.) Ludwig
Chapter 9: Malcom McLean
Chapter 10: America’s Richest Shipowner
Chapter 11: Aristotle Onassis
Three Months Later
Chapter 12: Cornelius Vanderbilt
Chapter 13: The Greek Grandfather of U.S. Shale Gas
Chapter 14: Shipowners as Children
Chapter 15: The Scream
Chapter 16: A Fragile Market
Chapter 17: The Century of Gas
Chapter 18: The Greek Shipowner’s Grandmother
Chapter 19: The Resilience of Greek Shipping
Chapter 20: The Volatility of Shipping
Chapter 21: A Family Business
Chapter 22: The Jim Tisch $5 Million Test
Chapter 23: John Pierpont Morgan
Chapter 24: The Baltic Exchange
Chapter 25: Sammy Ofer
Chapter 26: The Power of People
Chapter 27: The Channel Islands
Chapter 28: The Barclay Brothers
Chapter 29: Shipowners & Philanthropy
Chapter 30: Crowley Maritime
Post Fixture
Viking Raid
A Robert Fairchild Novel
By Matthew McCleery
Praise for The Shipping Man
From The Shipping Industry…
“Reading this book won’t make you a shipping man, but it’s a good start.” – John Fredriksen, Owner, world’s largest oil tanker fleet
“I feel I have been to Coco Jacobsen’s offices in Aker Brygge several times.” – Tor Olav Trøim, Director, Seadrill
“McCleery’s The Shipping Man is very, very funny…painfully funny, as his characters and stories are often closer to fact than fiction. It is a great insight into our wonderful industry. Go Coco Go!” - Robert Bugbee, President, Scorpio Tankers
“I don’t remember ever reading a book with as much accurate insight into our industry – which, combined with humor and pathos, made it very enjoyable.” – C. Seán Day, Chairman, Teekay Corporation
“The Shipping Man brought home the game of shipping in spades. I am still laughing about the picture McCleery has painted, as it matches a lot of my own experiences.” – Seymour Schulich, O.C., Co-founder, Franco-Nevada Mining Corporation, author and philanthropist
“The Shipping Man is exciting, well-written and the best guide to our industry I have ever seen.” – George Gourdomichalis, Greek Shipowner
“Why would someone risk millions to own ships? Well, for the sober, textbook answer, you could try Martin Stopford’s Maritime Economics, but for an explanation involving ‘shipowner’s punch’ and Jägermeister, The Shipping Man, a novel by Matthew McCleery, fits the bill nicely.” – Greg Miller, Fairplay
…To Wall Street
“Set at the intersection of finance and the high seas, The Shipping Man is essential reading for anyone with shipping stocks in their portfolio, but, for the rest of us, it’s simply a great read.” – Forbes
“It is very hard to marry entertainment with education – especially in the world of finance and shipping, but McCleery succeeds spectacularly in doing so.” – Mohnish Pabrai, Managing Partner, Pabrai Investment Funds
“The book is just phenomenal and had me splitting my sides at various points.” – Guy Spier, Aquamarine Capital Management
“McCleery’s ability to succinctly capture so many facets of the Wall Street morass into the characters is the best I have come across. Very skillfully crafted and delivered story.” – Tim Dooling, Analytic Firepower
“A gripping, hilarious novel about a hedge fund manager who buys a decrepit dry bulk carrier at what he thought was 1x EBITDA. It is also a crash course on the shipping business.” – creditbubblestocks.com
“The Shipping Man is really well written, absorbing and fun, and just very well done. I couldn’t put it down.” – Richard Hurowitz, CEO, Octavian Advisors
“It’s a quick read, it’s interesting, and it teaches a lot about ship financing and high yield financing…I promise you that if you read it you’ll have begun to put shipping into your circle of competence.” – WhopperInvestments.com
“Just like Émile Zola’s ‘L’argent’ can provide you with a unique glimpse into the world of nineteenth century banking, McCleery’s book does a great job capturing the state of the shipping and financial markets in the years 2007-2010.” – Clemens Scholl, Seeking Alpha
Viking Raid, Copyright © 2013 by Matthew West McCleery
Published by Marine Money, Inc.
62 Southfield Avenue
Stamford, Connecticut 06902
www.marinemoney.com
ISBN: 978-0-9837163-4-1 (Hardcover edition)
ISBN: 978-0-9837163-2-7 (Paperback edition)
ISBN: 978-0-9837163-7-2 (eBook edition)
Three of the chapters in this book originally appeared in Marine Money magazine in 2012. They have changed significantly since their publication.
This novel is a work of fiction. The transactions executed herein are for illustrative purposes only and should not be attempted without the assistance of a knowledgeable investment banker. Other than Hilmar Reksten, the sisters Kardashian, Andi Case, Johnny Depp, Richard Fulford-Smith, T. Boone Pickens, Matt Damon, Professor Costas Grammenos and certain other well-known figures whose appearance is incidental to the plot, all the characters in this book are products of the author’s imagination. None of the characters in this book is the portrait of a real person, living or dead.
All rights reserved. No part of this book may be used, reproduced, distributed or transmitted in any form or by any means, or stored in a database or retrieval system, without prior written consent of the author.
About the Author
Matthew McCleery is the president of Marine Money International, a ship finance publisher, conference organizer and advisory firm based in Connecticut, Singapore and Athens. He is also managing director of Blue Sea Capital, Inc., where he arranges debt and equity financing for oceangoing ships on behalf of shipowners and investors worldwide. Matt can be contacted at [email protected].
About the Epigraphs
Each chapter of the Viking Raid begins with an epigraph, which either provides biographical information about a selected shipowner or features a fact or quotation relating to the shipping industry. Although some of the epigraphs relate to the theme of the chapter they precede, most don’t. The source of the epigraphs is Wikipedia unless noted otherwise. Many of the epigraphs come from a fantastic article written by Lewis Berman and published in Fortune Magazine in 1974.
About the Cover
The image on the cover of this book is called Advancing on Blue #1 by Suzy Barnard, 2012, oil on wood panel. The painting was commissioned by Marine Money and depicts a partially laden, two-million-barrel VLCC, similar to the ones owned by Coco Jacobsen, at sea. More of Suzy Barnard’s fantastic work can be viewed on her website: www.suzybarnard.com.
With Thanks
I’ve been fortunate: fortunate that my curiosity led me into the Port of New Haven, Connecticut fifteen years ago and fortunate that I met
Joe and Dave, a pair of affable ship agents who invited me aboard a bulk carrier and introduced me to the truly amazing Connecticut Maritime Association (CMA) – and the equally amazing Jim Lawrence.
I was fortunate to be offered a CMA summer internship as understudy to Jim and Alan Ginsberg at Marine Money where I’ve been fortunate to have spent the past fifteen years working in ship finance – a fascinating business in which the words “client” and “friend” are almost always interchangeable. Someone once told me there are only two ways to get into the shipping business – either you’re born into it or you get lucky – and I got lucky.
I’ve also had a lot of help – with my life, my career, my deals and my books. Without the patience, support and encouragement of dozens of charitable people around the world neither Viking Raid nor The Shipping Man would exist. So it is with sincerity that I thank my editor, Steve Whelley, for his tireless help with the plot, Julia Hull for devotion, Jan Lindstrom Valerio for good advice, Elaine Lanmon for patience, Annie Gumpel for providing a second wind, Sarah Noonan for keeping an eye on the books after their release and Suzy Barnard for once again contributing what many rightfully consider the greatest feature of my books – the cover.
Thanks also go to my colleagues at Marine Money, especially Jim Lawrence, Lorraine Parsons, George Weltman and Elisa Bybee, who always keep the ship on course. Richard Squires’ commitment to bringing Robert Fairchild to Hollywood (as played by Brian Ladin) has gone beyond the call of duty. My brother Mike has continued his lifelong habit of gently stepping in just in time to save me from myself.
I am very grateful to the following friends and family whose good humor, encouragement and insight into the wheeling, dealing, dining and drinking habits in various locales around the world helped bring badly needed veracity to this story: Jeff Parry, John Bradley, Alan Ginsberg, Peder Bogen, Bob Kunkel, Peter Fortier, Lars Juhl, Beth Wilson-Jordan, David Frischkorn, George Weltman, David Capps, Nico Walsh, George Gourdomichalis, Kevin Oates, Witt Barlow, Tor Olav Trøim, Nancy McCleery, Jamie Freeland, Herman Hildan, Paul Goss, Christos Papanicolau, Thomas Söderberg, Seymour Schulich, Tom Roberts, Greg Miller, Michael McCleery, Don Frost, Campbell Houston, Richard Hurowitz, Andy Dacy, Kees Koolhof, Marc Baron, Erik Helberg, Bijan Paksima, Yolanda Kanavarioti, Aristotle Topalidis, Peter Evensen, Morris Morishima, Kim McCleery, Andre Grikitis, Eric Uhlfelder, Gary Wolfe and Robert Bugbee. Any wisdom or wit contained in this book is theirs – all errors, omissions and misjudgments are mine alone.
Finally, I also owe a debt of gratitude to my family for their support of this project. I want to thank my wife Buffy for tolerating the ever-presence of my laptop, my sons Rufus and Murphy for giving me so many great ideas during our daily drive to school and Homer for listening to me read Viking Raid aloud without complaint.
Introduction
For as long as there have been people, there has been a fascination with making money on the sea. Even today, especially today, as technology mercilessly strips mystery from most aspects of life and business, the sea remains what it has always been: a physically and financially unpredictable frontier that excites the imagination and creates and destroys fortunes.
Not surprisingly, the type of people capable of thriving in the global shipping business hasn’t changed much over the centuries; Greeks still account for the world’s largest fleet of merchant ships, the British and Dutch still provide financing and insurance for global seaborne trading and Norwegians still enthusiastically leave the safety of their shores, exactly as their Viking forebears did, in search of greater opportunity.
The Shipping Man and Viking Raid focus on the most recent fortune-seekers to join up with the adventurous world of shipping: Wall Street investors. The books follow the adventures of Robert Fairchild, a dethroned New York hedge fund manager whose accidental discovery of the famously private international shipping business changes his life.
The story of Robert Fairchild’s indoctrination into shipping was spontaneously conceived as a last-minute, five-page fictionalized article I wrote for ship finance trade journal Marine Money International. In the article, I attempted to explain some of the reasons why American investors were having trouble buying discounted shipping debt from European commercial banks during the post-2009 shipping crisis – and the story was meant to end there. But a few weeks after George Weltman published it, I received phone calls and emails from readers around the planet who asked the same question: What will Robert Fairchild do next?
In considering how to answer that question, I realized that a longer story, perhaps even a novel, would be a fun way to follow Robert Fairchild’s education in shipping. I also figured that writing a novel would be a great way to capture the spirit of the unique and amazing people running the global shipping industry at the turn of the twenty-first century – a Belle Époque for shipping during which China-led industrialization converged with the hyperactive global capital markets. From 2003 to 2008, anyone with a ship, any ship, got rich. In 2009, the market began to suffer from overcapacity and it still hasn’t fully recovered.
So my long-winded answer to the question of what Robert Fairchild would do next took the form of The Shipping Man – a homegrown combination of epic-length trade journal article and thriller. My ambition was not literary; it was simply to use an entertaining format to share some of the things I have observed about shipping and ship financing during my career. I enjoyed the process of writing the book so much that I continued the story with Viking Raid, which involves largely the same cast of characters when confronted with today’s shifting patterns of energy production, consumption and transportation.
I am truly grateful to have had the chance to write The Shipping Man and Viking Raid. The process has given me a unique opportunity to think seriously about the business of financing ships from the point of view of different participants – and to consider why the business of shipping, despite its considerable challenges, has been so alluring for so long.
I’m sure I haven’t gotten everything right in the books, but I sincerely hope reading them is as enjoyable for you as writing them has been for me – and that you come away knowing just a little bit more about the remarkable business of shipping.
“We must free ourselves of the hope that the sea will ever rest. We must learn to sail in high winds.”
Aristotle Onassis
For Buffy, Rufus, Homer & Murphy
The Viking Law*
Be Brave and Aggressive
Be Direct
Grab All Opportunities
Use Varying Methods of Attack
Be Versatile and Agile
Attack One Target at a Time
Don’t Plan Everything in Detail
Use Top Quality Weapons
Be Prepared
Keep Weapons in Good Shape
Keep in Shape
Find Good Battle Comrades
Agree on Important Points
Choose One Chief
Be a Good Merchant
Find Out What the Market Needs
Don’t Promise What You Can’t Keep
Don’t Demand Overpayment
Arrange Things So That You Can Return
Keep the Camp in Order
Keep Things Tidy and Organized
Arrange Enjoyable Activities Which Strengthen the Group
Make Sure Everybody Does Useful Work
Consult All Members of the Group for Advice
(*As described on a postcard that Rick Rockhold bought for me at the Oslo Airport circa 2007)
Chapter 1
Navigating the Shipowner’s Aegean Haven
They are a splendid assemblage indeed, representing most of Greece’s special aristocracy: the shipowners and their families. A visitor (to Chios) might well run into a member of the Livanos family, or a Karas, Chandris, Xylas, Lemos, Pateras, Los, Frangos, Tsakos, Fafallos – among others – all of whom by some strange act of the gods hail from Chios. Perhaps the only star
s missing are the Onassis family, who come from Asia Minor but are known to have lived on the island. Chios, in fact, is a kind of shipowners’ reserve, where ordinary mortals are not barred but have not been encouraged to visit.
The New York Times, 1983
When Coco Jacobsen stepped out of the twenty-seven-foot Riva and onto the island of Chios, the Norwegian tanker tycoon’s instincts told him that something monumental was about to happen.
He shuffled quickly through the seaside village of Kardamyla and slipped into the same deserted taverna where he had met the Greek each of the past thirty days. When he walked into the dimly-lit restaurant the two Russians who protected the Greek shipowner looked up from their cigarettes and dominoes and touched their shoulder holsters. Coco flashed a disarming smile as he made his way to the round table in the back corner and the men resumed their game.
“Kalispera,” the Greek said and smiled as he rose slightly from his seat and sat back down again. As always, the shipowner was alone except for an unopened bottle of local white wine, a basket of sesame bread and a dossier swollen with the deal documents. “Coco, the time has come,” he said.
“I sure hope so,” the deeply tanned Norwegian said as he peeled off his trademark Ray-Ban aviators and sat down on the wobbly rattan chair, “because I am very hungry today!”
Although Coco was not accustomed to eating so late in the day, as many Greeks did, he never grew tired of the meal they shared: a salad of local tomatoes and fresh feta, fried minnows caught by a village fisherman and a whole red snapper grilled over charcoal and bathed in that life-extending elixir of olive oil, lemon juice and freshly snipped oregano.
“There will be no lunch today,” the Greek said gravely.
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