DryShips Inc. (DRYS)
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DRYS Forum Topics
- All Comments on DRYS
- General Discussion on DRYS
- Some Stocks to Research for the Market Rebound [view article]
- Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
- Drybulk Shipping: Prepare for a New Record High [view article]
- Never Enough Lessons on Forward P/E [view article]
- Dryships: The Saga Continues [view article]
- Torpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
- DryShips: Time to Load the Boat [view article]
- Dryshippers: A Buy or a Sell? [view article]
- Today's True Safe Haven Investments [view article]
- Big Movers to Watch Today [view article]
- How to Invest in Shipping and Whether You Should [view article]
- Replacement Candidates for David Merkel's Portfolio: From AA to ZZ [view article]
loading ...Recent DRYS Articles
- Some Stocks to Research for the Market Rebound
- Dryships: The Saga Continues
- Never Enough Lessons on Forward P/E
- Some True Safe Havens Are Still (Surprisingly) Undervalued
- Big Movers to Watch Today
- How to Invest in Shipping and Whether You Should
- Today's True Safe Haven Investments
- DryShips: Time to Load the Boat
- Dryshippers: A Buy or a Sell?
- Global Growth At Risk; Eye on Joy Global, Terex, Pan American Silver, Dryships, Fluor
- Full List of Articles »
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Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
I read "War and Peace" faster than this endless article ...Has the author ever considered the proverb, "Brevity is the soul of wit" ?
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Torpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
I can't believe Cramer is still recommending Frontline!! He has been recommending that stock from the high of $70 all the way down to almost $30. What a joke. I have been buying puts in this market for awhile now and I have been doing well. I just can't believe Cramer anymore. We are all on our own in this kind of market!!! ReplyNever Enough Lessons on Forward P/E [view article]
Thanks Stalwart - all of this is great information. ReplyNever Enough Lessons on Forward P/E [view article]
btw, I have done the dry bulk supply/demand math in the past using industry research data from Clarkson and Marine Strategies International. Roughly, Global demand growth in a bullish scenario for china is in the high single digits (and this includes both volume and distance effects), while 2009 - 2011 supply growth goes from about 10 - 18% per year (I think about 10, 14, 18 in that order), even with about 25% cancellations factored in. These are rough numbers, but when I did the math it was clear that supply growth was going to be well ahead, with room for error, of demand growth. The scary thing is that in a bearish near term china scenario, global demand could actually go negative. If a negative growth rate butts up against a 10%+ supply growth rate, rates would collapse substantially further to perhaps something like BDI 1,000. ReplyNever Enough Lessons on Forward P/E [view article]
On China steel production growth long term, surely a huge story there, though we might have a near term slow down or contraction. The problem though is that Chinese demand growth only gives us the demand side of the shipping equation. The main danger is the supply side of the equation. Massive supply growth, well beyond even the best years we've seen for dry bulk demand growth, are on the way 2009 - 2011. So really its important to do some work on the supply side. Bulls will argue that a lot of ships scheduled to come won't be completed or will be delayed. It could be the case, but the supply growth well ahead of even bullish china demand scenarios, thus it has room to lose some steam due to ship cancellations, but still overwhelm a relatively bullish china demand story 2009 - 2011. I think nevertheless that the current global turmoil warrants a good study of what kind of cancellations we could see. They would have to be like 50% or more of the vessels scheduled for 2009 - 2011. Thus I think concerns for dry bulk go beyond the near term demand problems we have seen lately. I think no one will argue against the point that the China/Vale problems are temporary and that China still has a strong long term steel production growth story. ReplyNever Enough Lessons on Forward P/E [view article]
I like Stalwart's response this morning, reasonable and insightful I feel.All models are wrong by definition, and any valuation metric, P/E, P/B, P/S, ... you name it, has the garbage-in-garbage-out property -- the result is as good (or bad) as the input. Take forward P/E for example, it is obviously useless if you cannot predict the forward earning. I would thus rather focus on debating the underlying fundamentals than on the use of certain metrics.
Sticking to the fundamentals, I'll try to respond to some of Chris B's points. First of all, the China/Vale dispute is not, in my opinion, the reason for BDI decline. The 80 million metric tons of iron ore stored at 20 Chinese ports are the main reason. Too much iron ore was shipped to China before Olympics and it takes some time (some estimates two quarters) to work it through. This may be temporary, but enough to kill the spot market. Second, and more importantly, there is a real worry now that Chinese demand will decline materially. Steel price in China has declined by more than 20%, and big Chinese steel producers are trying to coordinate a supply cut of similar percentage. Furthermore, there is a concern that many real estate markets in China would crash, which will reduce steel demand from construction sector. Do I believe in all these? Partly. The steel price drop and production cut are real, and the sentiment is very bearish in Chinese financial news websites. Anecdotal evidence from China, though not related to material sector, points to slower growth and even deflation in some markets. None of these bold well for the near term. Longer term, sure, I am very bullish in China. But we should keep in mind that there is a huge difference between the real long term (5+ years) and the long term (1 year) that's relevant to stock market.
Coming to DRYS itself, I am very disappointed by the firm's recent move to acquire 9 capesize ships for $1.2B. The number simply does not add up: take the $50000 contract day rate of 3 of the ships as a starting point, the annual revenue of a ship is $18M max. Multiplying that by 9 (ships) and 10 (years), you can see that the combined REVENUE of these ships for the next 10 years will be $1.6B. What about income? What about discount rate? What about market risk ($50K rate is much higher than the spot rate now)? In such an environment, it's as reckless a move as one can imagine. On top of that, the fact that these ships were purchased from an entity controlled by Economu (DRYS CEO) raised a serious conflict-of-interest issue. I have been very interested in buying DRYS shares but this simply put a stop on it. Could anyone shed some light on the rationale behind this deal? I will really appreciate it.
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Torpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
I should start a mutual fund that does the exact opposite of what Cramer says. I'd be the next Peter Lynch. ReplyHuneycutt
Dryships: The Saga Continues [view article]
Interesting insight.I just looked at their balance sheet and the book value of their equity was around $28 at the time of their last annual report (end of March). Given that they have made substantial positive cash flows from operations recently, that might have improved slightly from that point. With the stock trading around $22, it would seem as if this proposed method of valuation would end up giving you almost exactly the current price.
However, if they are still bringing in substantial cash flows for the next few quarters, I'd argue that this undervalues them a little bit. Then again, they are more levered than I'd like to see. Reply
Torpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
I like most of you have watched Cramer for years. I use to think his advise was the greatest thing since sliced bread. I backed up the truck on RIG at $110 and did likewise on NOV at $54. Well, RIG went to $163 and NOV went to the 80's. Why did he not tell us to sell then. Instead he puts a sell,sell,sell on RIG at $84.He would cover himself by saying I always tell you to take some off the table...and he is probably right.
We all hate to hold losers but RIG and NOV both are international and they will be back. My take on Cramer now is to ignore him...he is in panic mode and his brain is not working right.
RIG has 10 years of backlogs and NOV does too. The fundamentals on both of these companies is still sound so if you sell now you are doing so at your own peril.
I would say buy, buy, buy....let's see which one of us is right.
Two others to buy DE and MOS...absolute steals at this level.
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Torpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
To Smartstops,I see you are in the Risk Management business. What studies are you referring to that show "Buy and Hold is one of the most riskiest strategies to use"? Reply
Torpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
Please just remember that you ALWAYS need an Intelligent Exit Strategy from the start when investing. One that is continually adjusting itself to the stock's behavior and overall market conditions. This doesn't necessarily make you into a trader though if a few extra "sells" at a low-cost commission during the year, save you thousands of dollars - isn't that worth it? Active Risk Managing is what is needed in this 21st century market which has many things driving it that were not in existence before - like a $3Trillion unregulated hedge fund industry, like a huge underlying option derivative industry etc. Buy&Hold is one of the most riskiest strategies to use. Studies show that. Be smart! ReplyTorpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
I believe that Cramer is a trader, not an investor. That is why his recommendations change as the economy and market changes. I would like to know what his investment recommendations are. ReplyTorpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
Greatest entertainer I know. You people don't really listen and buy on his advise, do you?? ReplyTorpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
It will be sad to see millions of impoverished baby boomers who sold at the bottom on the advice of a shouting head on TV, digging through trash and resorting to prostitution and petty theft. But then again, what should we expect from the generation that gambles on stocks with one hand and pay 15% credit card interest with the other. You know... the folks who bought GMC Suburbans in 2003 expecting that Bush's war against Iraq would lower gas prices. You know... the folks who ship thousands of dollars each year to communist China and jihadist Saudi Arabia buying too much junk and oil, and then slap a patriotic magnet on their car (a sticker would be too hard to remove I guess). ReplyTorpedo Dry Ships - Cramer's Lightning Round (10/8/08) [view article]
Agreed Norman, the more I read on Cramer the less I like Reply