Two months ago he dipped his toe into another tide of woe by investing in a new shipping venture. Nautical Bulk Holdings has raised more than $100 million and ordered eight ultramax dry bulk behemoths at $24.5 million a pop to meet rising demand as early as 2015.

Last month, Aggressive Portfolio holding Oaktree Capital (NYSE: OAK), managed by another distressed investing icon, Howard Marks, disclosed a huge 21.9 percent stake in Star Bulk Carriers (NYSE: SBLK).

Why are these financial sharpshooters taking aim at a sector thoroughly beaten down by years of oversupply? Presumably they’ve spotted a turning point on the horizon.

International shipping rates as represented by the Baltic Dry index nearly doubled during August and September, before surrendering about half that gain. At current levels, they remain down more than 60 percent from rates seen as recently as 2010, and before that as early as 2003. Yet Asian demand for iron ore, coal and grain keeps growing, while depressed rates have depressed investment in new ships and encouraged the accelerated scrapping of older carriers that cannot be operated profitably at current rates.

Source: partnership presentation

As a result, the dry bulk shipping market may end this year in rough balance for the first time since 2008, after years of oversupply. Next year’s delivery slate is much thinner, because these will be the few ships ordered after rates had already crashed.

Our Aggressive Portfolio already includes an obvious beneficiary of these trends in Navios Maritime Partners (NYSE: NMM), a partnership with 25 dry bulk carriers and now five newly acquired container ships.

Earlier this year, some onetime NMM bulls sounded warnings that its double-digit distribution yield might not be in imminent danger of a haircut. In fact, charter rates rose and it became clear that Navios can sustain the current distribution not just through the end of this year but, as it has promised, throughout 2014.

And now the transformative container ships acquisition has changed the conversation from when the distribution will be cut to when it might be raised. It offers NMM unitholders an annual distributable free cash flow boost equal to 10 percent of the initial $275 million investment, mostly financed with debt at an interest rate of around 5 percent – in other words, a big win. The distribution coverage has ived from 0.9x to 1.18x pro-forma for the deal.

With these 10-year charters in place, the two high-rate charters expiring next year no longer pose a material distribution risk. On the whole, Navios ships are newer and therefore more efficient than the industry average. The dry bulk fleet is on average 6.5 years old vs. an industry average of 9.6, whereas the newly acquired container ships are 7.3 years old on average, versus 10.8 years for the global container shipping inventory.

The balance sheet is similarly fit. Net debt is just 13.7 percent of capitalization and the bulk of the attractively priced borrowing doesn’t mature until 2018.

A relatively secure double-digit yield tends not to last long in this era of low rates. So while NMM units have already rallied 15 percent since we upgraded them to Buy two months ago, more gains likely lie ahead. Buy NMM below $17.70, a level at which the current distribution would still yield 10 percent.

Targeting Targa’s GP

If we forget about yields and valuation and price performance, and just focus on the most thriving businesses and most valuable assets already included in the portfolio, Gulf Coast gas gatherer and processor Targa Resources Partners (NYSE: NGLS) stands out.  Its gathering systems in the Permian basin and the Bakken are poised to benefit greatly from the continuing increases in US oil and gas production. Meanwhile, Targa’s rapidly expanding fractionation and terminal capacity along the Gulf Coast leaves it well placed to capitalize on the coming boom in exports of purity products derived from natural gas liquids.

Third-quarter revenue was up 12 percent year-over-year while distributable cash flow jumped 43 percent as additional processing and loading capacity came on line. The distribution, now fully covered by the improved and still improving cash flow, increased  11 percent year-over-year for a yield of 5.7 percent at the current price. The partnership is forecasting distribution growth of 7 to 9 percent next year.

Meanwhile, its general partner, the C-corp Targa Resources (NYSE: TRGP) is currently only yielding 2.9 percent based on its latest dividend payout. The per-share dividend is on track to grow 30 percent this year, but the stock is already up 50 percent year-to-date.

Source: company presentation

Still, TRGP is promising to raise its per-share payout another 25 percent next year. It can do so because its incentive distribution rights entitle it to 48 percent of the incremental gain in distributions to NGLS partners. Yet it only has 60 percent of the capitalization of NGLS. The more NGLS grows, the more TRGP will benefit disproportionately, the main reason shareholders have been eager to sign up for the lower yield.

But the yield and the faster growth leave out another reason to invest in TRGP in addition to NGLS. And that is that as the general partner TRGP would be the more valuable entity to own in a buyout, which is hardly improbable. Targa’s rapidly expanding Galena Park liquefied petroleum gas export terminal right next to the national fractionation capital in Mont Belvieu, Texas, could fetch a fat premium as a strategic asset, and its gathering pipes along the Louisiana coast may also become more valuable as the flood of natural gas liquids into the region drives a boom in petrochemical production.

But Targa’s prospects look bright whether or not a suitor materializes. As an added bonus, TRGP shares pay a regular dividend reported on form 1099, and are suitable for IRA accounts while profiting from the growth at NGLS. We’re adding TRGP to our Growth Portfolio; buy below $85.