What happened

Shares of DHT Holdings (NYSE:DHT) closed 6.8% higher on Friday after the Bermuda-based oil tanker owner-operator reported its fiscal third-quarter earnings results Thursday evening.

Surprisingly, DHT's gains came despite the fact that it lost $0.15 per share (Wall Street had anticipated a loss of only $0.10 per share), and despite the fact that its $48.2 million in revenue for the quarter likewise fell short of Wall Street estimates. 

Tanker moving through the seas

"Darn the GAAP losses, full speed ahead!" shout DHT investors. Image source: Getty Images.

So what

DHT's news was as objectively bad as it was bad relative to analyst expectations. Sales for the quarter declined 12% year over year, while losses ballooned nearly four times in size from last year's $0.04 per-share Q3 loss. So, what explains investors' optimism?

It's impossible to say for sure, but if you ask me, I suspect it's the Baltic Dirty Tanker Index that's to "blame" for DHT's higher share price.

Now what

As a crude oil tanker, DHT's rates (and revenues, and profits) are largely determined by the prices other shippers of "dirty" oil are able to charge -- rates reflected on the Baltic Dirty Tanker Index, or BDTI. According to data from Investing.com, rates on the BDTI went pretty much perpendicular in October -- shooting up from "793" on the first of the month to "1,157" by Halloween.

As long as this trend holds, I suspect investors will pay little attention to how poorly DHT has fared in the past -- and keep their spyglasses glued to the chart, hoping it forecasts how DHT will fare in the future.

Rich Smith 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.