Catching a value turn is not about calling the exact bottom. It is about stacking a few reliable signals that say downside is limited and the odds of tighter earnings are rising. Use the five checks below to turn gut feel into a number you can defend.
The idea
You are not trying to nail the day. You are trying to see when several signals line up so the odds favor buying before headline values move.
How to use this
Score each signal for your size and trade. If three or more lean positive and your downside is limited, scale in rather than waiting for perfect news.
The five signals
Cycle phase • Asset yield • Spot vs period • Supply setup • Liquidity and credit.
Five signals at a glance
| Signal | What to check | Turn hint |
|---|---|---|
| Cycle phase | Earnings vs opex, orderbook trend, scrap pace, forced sales | Positive when values stop falling while earnings are still patchy |
| Asset yield | Convert likely cash flow to an unlevered yield on price | Positive when yield sits above mid-cycle norms |
| Spot vs period | Compare last 90-day spot to 1-year TC and forward curves | Positive when period rates hold a steady premium |
| Supply setup | Orderbook timing, yard slots, scrapping incentives, detours | Positive when near-term fleet growth is capped and detours persist |
| Liquidity & credit | S&P bid depth, bank appetite, spreads, sale-leaseback talk | Positive when finance loosens and real bids appear |
Signal 1 — Read the cycle, not the last quote
- Last 6–12 months TCE by lane vs opex
- Orderbook percent and delivery timing by segment
- Scrap prices and age profile of the tail
- Forced or distressed sales, PSC detentions trend
True turns often show earnings still uneven, while bid lists firm and forced sellers clear. New fixtures carry options and profit share.
Signal 2 — Turn price into a yield
Arguing “cheap” or “rich” is vague. Calculating unlevered yield anchors price to cash. Compare to your mid-cycle band for the class and size.
Unlevered cash yield: 0%
Compare against your mid-cycle band. If the yield is above that band while supply is tight, values may be lagging.
Signal 3 — Spot, period, and forward curves
- Spot soft but 1-year TC quoted at a premium
- Owners winning profit share or owners’ options
- Forward curves implying better netbacks than recent spot
TC premium or discount: 0
A sticky premium says charterers are more bullish on the next year than the last quarter suggests.
Signal 4 — Supply setup that supports a turn
- Near-term deliveries limited or delayed by yard capacity
- Scrap economics improving for older units
- Routing detours (e.g., security or canal constraints) adding days
- Limited fresh ordering due to price or fuel uncertainty
Translate routing changes into effective supply tightening.
Extra days: 0 | Fuel cost: $0
Signal 5 — Liquidity, credit, and real bids
- Sale and purchase lists get deeper with real buyers
- Banks and SLB desks reopen or tighten spreads less
- Private equity chases older eco units with survey runway
Red flags lower your exit price even in a turn. Score the current setup.
Liquidity score: 0 / 6
4–6 suggests a healthier bid side and better resale support.
Decision frame
Add the pieces: if asset yield is attractive, period rates hold a premium, supply looks constrained, and liquidity improves, step in gradually and keep survey and compliance risk controlled.
Expected annualized resale hit: $0
Expected benefit after probability: $0
Net effect per year (PV-adj): $0
Use conservative inputs. Scale entries over time instead of one large bet.
A value turn is easiest to see when several small edges point the same way. If the unlevered yield screens well, period rates hold a premium, supply looks tight, and real bids appear, you do not need to guess the bottom. You can size in, keep survey and compliance risks under control, and let the market do the heavy lifting.
