Growth Portfolio holding Knightsbridge Tankers (NSDQ: VLCCF) reported that average daily time charter equivalents for its four double-hull very large crude carriers (VLCC) and its four capesize dry-bulk carriers were $34,200 and $36,700, respectively. With only one of its vessels taking work from the spot market, these lease rates were roughly flat relative to year-ago levels.

The market rate for a VLCC on a standard trip between the Arabian Gulf and Japan in the first quarter of 2011 was $20,200 a day, up $4,600 a day from the fourth quarter but down from $29,700 a day from the first quarter of 2010. In its first-quarter earnings release, management noted that “market indications are approximately $10,000 a day in the second quarter of 2011.”

A spate of new crude and dry-bulk carriers have driven down tanker rates, but seven of the company’s eight tankers are booked under long-term time charters that insulate Knightsbridge from weak lease rates in the spot market.

The market should absorb new tanker supply over the next 12 months, putting Knightsbridge in a good position to put its two vessels coming off contract in the summer 2012 back to work. Moreover, the company’s solid balance sheet enables it to remain profitable when tanker rates are lower.

Nevertheless, the stock sold off in sympathy with shares of Frontline (NYSE: FRO), a company whose earnings depend heavily on lease rates in the spot market.

With long-term contracts providing insulation against a weak prices in the spot market, Knightsbridge Tankers is a buy up to 27.50 for its sustainable dividend.