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Why Nordic American Tanker's Shares Popped 19.8% Today

What happened

Shares of Nordic American Tanker (NYSE: NAT) jumped as much as 19.8% in trading on Friday after getting some good news from management. At 1:50 p.m. EDT, shares are up 13.8% and look to end the week on a positive note.

So what

Yesterday, Founder and CEO Herbjorn Hansson sent a note to investors pointing out that the continuing Suez Canal blockage could actually be good for business. Ships would be forced to sail around Africa, taking more time to complete longer voyages. And if that happens, it would effectively reduce the industry's shipping capacity, and this in turn should push freight rates higher.

Image source: Getty Images.

Today, Herbjorn Hansson announced that his son and board member Alexander Hansson bought 50,000 shares of Nordic American Tankers stock for $3.69 per share. So, the conviction within the company appears high.

Now what

Short term, the blockage in the Suez Canal should help Nordic American Tanker's operations. But we still don't know how long the delays will last. For now, investors are piling into this energy stock, and management's conviction is helping. But keep in mind that day rates for ships can be volatile, so even if the current saga in the Suez Canal leads to higher rates, they may not last long.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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