Sohn Hong Kong 2026 – Seahawk’s Henry Liang Makes the Bear Case for This Shipping Giant As VLCC Valuation Gap Exposed

Henry Liang, Founder and Director of Seahawk China Dynamic Fund, opened his 2026 Sohn Hong Kong Investment Conference slot with a detailed short idea. His target was a dominant and well-known crude tanker operator. His conclusion: the stock trades on a false prosperity narrative, the freight rates underpinning its consensus earnings are illusory, and the shares carry at least 30 to 50 percent downside in the medium term.

Why Tanker Shipping Is One of the Worst Business Models in the World

Seahawk China Dynamic Fund, which Liang launched in October 2017, is a China-focused multi-strategy hedge fund that managed over US$700 million as of December 2025. Since inception, the fund reports an annualized return of more than 30 percent and over $900 million in cumulative profit before fees. Before starting Seahawk, Liang worked as an analyst at Goldman Sachs Investment Partners (GSIP), a multi-billion-dollar long/short equity hedge fund at rthe bank. He earned a B.A. in Economics from Peking University in 2014 and spent a year at the Yale University School of Management.

Before arriving at the stock, Liang spent considerable time on the industry itself. He described crude tanker shipping as having nearly every feature of a structurally unattractive business: heavy capital requirements, no meaningful barriers to entry, extreme fragmentation, no pricing power, and deeply cyclical demand. Global oil production has grown from 76.9 million barrels per day in 2000 to 103.5 million in 2025, but seaborne crude trade has been essentially flat over the same period, with demand CAGR barely exceeding 1 percent per year since 2008.

The supply dynamic makes the business particularly punishing, Liang argued. Ships last 25 to 30 years, and once a vessel enters the fleet it does not disappear. Any period of overordering locks in excess supply for decades, crushing freight rates until the next positive demand shock. Crude tanker fleet supply has grown at a CAGR of 4.1 percent since 2008 against demand growth of just 1.1 percent, a persistent imbalance of roughly 3 percentage points per year. The global fleet has grown from 227 million DWT in 2000 to 466 million DWT in 2025, and the current orderbook has climbed to 24 percent of existing fleet size as of May 2026, with annualized supply growth projected at 6 to 8 percent over 2026 to 2028.

The Current Boom Is Built on One-Off Geopolitical Shocks

Liang acknowledged that the past four years looked exceptional for tanker operators. Post-COVID demand rebounded, Russia’s invasion of Ukraine rerouted oil flows, Western sanctions on Russia, Iran, and Venezuela pulled a growing portion of the fleet off the open market, and the resulting longer voyage distances inflated ton-mile demand. The sanctioned crude tanker fleet grew from roughly 17 million DWT in 2021 (3.9 percent of the total fleet) to approximately 89.6 million DWT by 2025 (nearly 19.2 percent). The net effect was that demand outpaced supply for each of the past four years, sending VLCC daily earnings to levels not seen in years.

Liang’s point was that none of these drivers is repeatable. Each was a one-time geopolitical shock. There is no reason to expect a new demand shock of equal magnitude every year going forward, while the supply side is now set to grow sharply regardless of geopolitics.

The Middle East Rate Spike Is a Statistical Illusion

One of the sharpest parts of Liang’s presentation was his dismantling of the headline freight rate figures. The Baltic Dirty Tanker Index and the Middle East Gulf to China VLCC rate appeared to spike dramatically, with some evaluated rates briefly touching numbers above $400,000 per day during the Iran conflict. These figures are misleading, Liang showed, because Middle East departures carry more than 50 percent of the Baltic Index weighting, and since the outbreak of the Middle East conflict, the Hormuz Strait has been effectively closed to commercial VLCC traffic. The quoted Middle East rates therefore reflect evaluated assessments with no actual executed volumes behind them.

The routes that actually matter – US Gulf to China and West Africa to China – tell a different story. Those lines peaked and have since declined back to approximately $100,000 per day, close to pre-war levels.