Star Bulk Carriers Corp. (SBLK) is a thinly traded micro-cap dry bulk shipping company currently worth around $30m, but will soon be worth over $100m after their backstopped equity offering (rights expiring 7/19/2013).
Buy and hold investors in Star Bulk's 2007 IPO have seen a devastating -96.26% return from 12/3/2007 to 6/28/2013. Exhibit 1 illustrates Star Bulk's fall, which is primarily caused by an oversupply of dry bulk ships made far worse by the Great Recession.
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Under pressure from lenders, Star Bulk was forced to raise equity through a backstopped equity offering to prevent bankruptcy. Existing or soon-to-be common shareholders will not profit as the dry bulk ship oversupply has not abated and a...