Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
I can't find anything in the article to disagree with. The recent Panamax signings at 9K per day show just how hard of ball DSX is playing.
They are going to pressure the rates to stay low. This kind of puts the other drybulkers in a corner unable to fight.
DSX only has so much market power, but their strategy is going well. I wouldn't be surprised if DSX made a small acquisition with some of that cash one of these days.
By the way, anybody notice the new ticker for ORIG? It is ORIGV at this time. I don't know the details of the change, but is signifies a pending issue and distribution of some sort.
I'll comment on it over the next few days. I'll probably write an article soon covering some drybulk names I rarely cover to get a bit more reach.
The most captivating thing going on in the market right now in my eyes is the deep collapse oil is experiencing. Truly almost appears to be a repeat of drybulk's collapse. Drillers overbought, all leveraged, and it is resulting in there already being excessive oil supply versus demand, with more on the way every day.
My honest belief is that we are about to witness a massive destruction in oil demand over the next 5 years. Hybrid and electric cars are on the cusp of truly taking over the world. Not to mention telecommuting which takes zero oil!! LOL.
The deep drilling spike we just saw seems to me to be acknowledgment by oil reserve owners that they had better sell that oil now while the getting is good. If the Chevy Volt and similar vehicles drop in price by 50% due to the technology getting cheaper and the economies of scale taking over, oil is gonna get smacked like never before.
In 10 years, oil might not be used in vehicles anymore. Hard to imagine, but the economic effects would be amazing if it does happen.
I mean if I could plug my car in overnight and drive 500 miles for 90 cents, and the car only cost me $8000 brand new, who wouldn't switch?
Even solar is making strides these days. There are solar cell phone chargers that work really, really well.
Some very noteworthy research would be to see if there are any shippers flirting with solar panels on the ships to generate power. They certainly have a lot of daylight to use. A solar-hybrid ship is probably in the future if it doesn't exist.
The real hidden danger with DRYS is this general belief that ORIG is a safe company. Nothing could be further from the truth. Oil is in the midst of an absolute collapse as we speak.
Dryships isn't the weakest shipping company out there, but it is a weak one.
Writing puts is nearly identical to writing covered calls. What it does is limit upside gains but provide more downside safety. When I initially entered the PCS position about 5 or 6 months ago, I felt the shares were a bit overvalued at about $9.00, so instead of buying the shares, I wrote some puts which exercise at $7.00.
I got something like a 50 cent premium, you could say my cost basis is about $6.50 per share. My puts expire in November, meaning that if PCS is below $7.00 at that time, I will then take possession of the shares.
My position was sort of like buying a MetroPCS corporate bond, but synthetically built from options. A very medium risk position essentially writing insurance policies for shareholders in trouble.
Another reason I am so confident that PCS has a secure foundation is I believe that many, many investors have identical positions to mine. In other words, as the months go by, more and more option writers will begin taking control of shares which have a rather low cost basis.
Also, if the recession gains steam, Metro will act as somewhat of a safe haven stock.
Good stocks don't go up right away. They make you show that you can hold and endure the risk which was required.
I actually think PCS is just about right near bottom these days. I will be taking possession at $7 in November if not.
Total agreement. Not many stocks with better value than PCS going under the radar. Very recession proof stock as well.
The depreciation expense has been rising, evidently due to more 4G equipment coming online.
Whether they continue expanding network reach or buyback shares, it is a money machine.
There is definitely more competition than 2-3 years ago, but quality has improved enough that I think many see PCS as a higher quality service than T-mobile now, and for slightly cheaper.
Eagle Bulk Shipping: Another Drybulk Equity To Avoid [View article]
I don't really have "skin in the game" ever. EVERY position I have is so finely minimized that my portfolio is nearly invincible. Truthfully, my position is designed to be a winner even if the market goes against me. So I could have held this EGLE pop without budging an inch, ever.
There are certain minimums and maximums that must be obeyed in every trade depending on how the market behaves relative to the security.
Each put was $2.50. Profit was $20 after commissions. The trade ended up essentially providing liquidity to the market. I could have closed the trade one day earlier for about $100 in profit. So my closing the trade was essentially like locking in profits in a liquidity sense.
The Only Way DryShips Can Survive [View article]
Diana Shipping: Safest Shipping Play, Trading At A Discount [View article]
They are going to pressure the rates to stay low. This kind of puts the other drybulkers in a corner unable to fight.
DSX only has so much market power, but their strategy is going well. I wouldn't be surprised if DSX made a small acquisition with some of that cash one of these days.
The Only Way DryShips Can Survive [View article]
The Only Way DryShips Can Survive [View article]
The most captivating thing going on in the market right now in my eyes is the deep collapse oil is experiencing. Truly almost appears to be a repeat of drybulk's collapse. Drillers overbought, all leveraged, and it is resulting in there already being excessive oil supply versus demand, with more on the way every day.
My honest belief is that we are about to witness a massive destruction in oil demand over the next 5 years. Hybrid and electric cars are on the cusp of truly taking over the world. Not to mention telecommuting which takes zero oil!! LOL.
The deep drilling spike we just saw seems to me to be acknowledgment by oil reserve owners that they had better sell that oil now while the getting is good. If the Chevy Volt and similar vehicles drop in price by 50% due to the technology getting cheaper and the economies of scale taking over, oil is gonna get smacked like never before.
In 10 years, oil might not be used in vehicles anymore. Hard to imagine, but the economic effects would be amazing if it does happen.
I mean if I could plug my car in overnight and drive 500 miles for 90 cents, and the car only cost me $8000 brand new, who wouldn't switch?
Even solar is making strides these days. There are solar cell phone chargers that work really, really well.
Some very noteworthy research would be to see if there are any shippers flirting with solar panels on the ships to generate power. They certainly have a lot of daylight to use. A solar-hybrid ship is probably in the future if it doesn't exist.
The Only Way DryShips Can Survive [View article]
The hope and prayer that the sector will rebound during a world-wide depression seems illogical to me.
The only point of that argument would be to pump a gamble.
Maybe it won't fall apart quickly if banks make some moves and absorb some losses now, but the fall is still going very orderly.
I missed reshorting EGLE, but I will watch it.
The Only Way DryShips Can Survive [View article]
I think there is some value in those bonds if very diversified and well chosen, but the equity is worthless across the sector.
The Only Way DryShips Can Survive [View article]
Dryships isn't the weakest shipping company out there, but it is a weak one.
Should MetroPCS Buy Back Shares? [View article]
I got something like a 50 cent premium, you could say my cost basis is about $6.50 per share. My puts expire in November, meaning that if PCS is below $7.00 at that time, I will then take possession of the shares.
My position was sort of like buying a MetroPCS corporate bond, but synthetically built from options. A very medium risk position essentially writing insurance policies for shareholders in trouble.
Another reason I am so confident that PCS has a secure foundation is I believe that many, many investors have identical positions to mine. In other words, as the months go by, more and more option writers will begin taking control of shares which have a rather low cost basis.
Also, if the recession gains steam, Metro will act as somewhat of a safe haven stock.
Good stocks don't go up right away. They make you show that you can hold and endure the risk which was required.
I actually think PCS is just about right near bottom these days. I will be taking possession at $7 in November if not.
Why I Think Vivus Is A Safer Bet Than Arena Pharmaceuticals [View article]
Should MetroPCS Buy Back Shares? [View article]
The depreciation expense has been rising, evidently due to more 4G equipment coming online.
Whether they continue expanding network reach or buyback shares, it is a money machine.
There is definitely more competition than 2-3 years ago, but quality has improved enough that I think many see PCS as a higher quality service than T-mobile now, and for slightly cheaper.
Why I Think Vivus Is A Safer Bet Than Arena Pharmaceuticals [View article]
I'll believe it when I see it.
Eagle Bulk Shipping: Another Drybulk Equity To Avoid [View article]
There are certain minimums and maximums that must be obeyed in every trade depending on how the market behaves relative to the security.
Each put was $2.50. Profit was $20 after commissions. The trade ended up essentially providing liquidity to the market. I could have closed the trade one day earlier for about $100 in profit. So my closing the trade was essentially like locking in profits in a liquidity sense.
Eagle Bulk Shipping: Another Drybulk Equity To Avoid [View article]
I will say that I am looking to reshort this now. Probably already should have, but I am gonna see if it pops more tomorrow.
Proof:
Tue Jun 19 12:01:31 2012 Sell 2 EGLE Dec 22 '12 $5.50 Put Executed @ $2.5
The position was only two puts. I keep my portfolio very diversified with small positions.
The Only Way DryShips Can Survive [View article]
Tricky line to walk. If the economy falls off a cliff, the lenders will forced to get tough. If the economy treads water, the lenders can give in.
Crap shoot at this point.
Eagle Bulk Shipping: Another Drybulk Equity To Avoid [View article]
I feel EGLE may be worthy of another short now. That is what I am currently considering.