DryShips Inc. (DRYS)
Loading...
Symbols:
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 »
Trading Center
Hedge Fund Jobs
Job Seekers: Search jobs by category, get job alerts by email or live feed, apply online See full list of jobs »
Employers: See all recruitment options, get applications online or by email Post a job »
Never Enough Lessons on Forward P/E [view article]
I also forgot to mention the ultra deep water drill ships. Dryships owns 2 ultra deep water drill ships which they acquired from Ocean Rig ASA.The Leive Ericksson and the Eirik raude both are Fifth-generation semi-submersible drilling units. They also have 2 UDW Drillships that are in the process of being built. Aslo during this month they will acquire two newbuilding UDW drillships to be delievered by Samsung in Q4 2010 and Q1 2011.
The Leive Ericksson is contracted to Shell and will be available for contract in 2009.
The Eirik Raude is contracted at $637,000 average day rate.
The average revenue from drilling contracts daily during the previous quarter was $512,222.
The rig operating expenses daily was $148,755.
Dryships is going to pay all dryship stock holders an issuance in the form of a dividend, stock in a new company called PrimeLead which will be the Ultra Deep water Drilling company listed on the NASDAQ. This will be a total of 6 ultra deep water drill ships and as you can see from above this will be a very profitable company.
Value of UDW Unit for DryShips
This is taken from the presentation on Oct 6th:
We estimate the equity value of Primelead based on different valuation
methodologies ranges:
From $ 2.55 to $ 2.80 billion
Which, if correct, and divided by the 75% share owned by DryShips shareholders
should result in a Primelead common stock price(1):
From $30 to $31 per share
DRYS Share Closing Price on October, 3, 2008: $31.50
If you play the spin off and vaulue Primelead at the 31 dollars per share then what are you getting dryships for? With yesterday's closing price of drys at 21.85?
58 DryBulk ships, 29 of which have time charter fixed contracts?
Reply
Never Enough Lessons on Forward P/E [view article]
Many dry bulk companies have a portion of their ships in fixed contracts, yet lower rates on their spot portion of their fleet still hurts. There are many examples of bulk shippers with some fixed contracts who have seen their share prices collapse. The main point of the piece was in regards to the unreliability of depending on forward earnings performance of a bulk shipper. At the current price, DRYS might actually be a decent Buy now but I don't have time for the full analysis. Note that I have seen tons of company reassurances such as you show above. The reality of the situation is that dry bulk rates hit sky high levels and weren't sustainable long term. Even the current levels on the BDI are strong by historical standards. What this means is that we could still have a strong demand story, but rates could actually fall. Why? Massive vessel supply is coming online, and this will accelerate through 2010. Credit problems could slow some of it, but supply growth is so large that we could have a lot of cancellations, yet still have strong dry bulk supply growth nevertheless. The China steel slowdown will compound with the supply growth problem and is likely to really hurt dry bulk rates. Again, realize that the current BDI level is actually a strong level historically. It still represents a lack of ships globally. As this bottleneck gets cleared, and chinese steel demand softens, the BDI could still go lower and not be a disaster situation relative to history. BDI 3,000 is very strong actually. The problem for dry bulk stocks like DRYS was one of the stock price depending on meeting sky-high forward expectations. To believe that BDI 10,000 was sustainable long term was utterly ridiculous. Dry bulk as a business can't earn outsize profit margins, higher than a lot of advanced tech or branded media outfits, for what is basically an easy to enter business. Sky high expectations are easy to miss, and they were, thus dry bulk stocks when from ridiculous valuations down to what actually could now be decent levels for value investors. Finally, while fixed contracts are likely to be honored, keep in mind that in the past major dry bulk downturn, a lot of customers walked away from their fixed contracts when times were tough. Thus while its good DRYS has some fixed contracts, they aren't bulletproof. If its worth a lot of money to walk away from a contract, or force a renegotiation, then some customers might think its worth the loss to their reputation. It happened last time. ReplyNever Enough Lessons on Forward P/E [view article]
You are extremely mistaken in your valuation of dryships.You are not taking into consideration the fact that dryships has over half of its vessels under time charters or long term fixed contracts. Therefore, those ships rates are not affected by the current Baltic Dry Index. 24 vessels out of 49 have Time Charters. In addition with the fleet expansion as of Oct 6, dryships acquired 9 more ships, 5 of which with time charters, or fixed contracts.
Oct 6, 2008 DryShips Announces Strategic Expansion Adding 9 Capesize Vessels and 2 UDW Drillships Conference Call to be Held Today at 9:00 A.M. EDT
The following is an email from Paul Lampoutis
Vice President
Capital Link, Inc.
230 Park Avenue, Suite 1536
New York, NY 10169
T:(212)661-7566 x236
F:(212)661-7526
plampoutis@capitallink...
capitallink.com
capitallinkforum.com
The following link will take you to the DryShips fleet deployment chart www.dryships.com/ir.cf.... As you can see from the chart, DryShips has a balanced mix of both spot and fixed rate contracts, fixing half its fleet on long term charter coverage. This secures the company from market volatility, such as we are experiencing today.
For the three months ended June 30, 2008, the total vessel operating expenses were 6,559, based on this figure, DryShips vessels are still very profitable even in the current freight rate environment. I.E. the Baltic Dry Index.
As you may already know, the decline in DryShips shares is not related to the change in Company fundamentals but to the weakness in the Dry Bulk sector. Dry bulk stocks specifically have suffered due to the decline in the Baltic Dry Index. The fall in freight rates is mainly due to seasonality, the Olympics and weakness in steel prices. Today’s volatility in the BDI can also be attributed to the demands from Brazil's Companhia Vale do Rio Doce (Vale), China's largest supplier of imported iron ore, to increase its prices to its Asian customers. Until this is resolved, China is not importing Vale’s iron ore. Market sentiment is that dry bulk fundamentals will remain strong and that industrial and construction activity is expected to resume in China in the fourth quarter which should allow rates to strengthen.
This post contains forward looking statements. Reply
Dryshippers: A Buy or a Sell? [view article]
I sure hope DRYS goes up. It took a hit from the financial crisis and i bought it at $37. I'm hoping that since it isn't directly involved in that crisis, just indirectly, that it will bounce up to $60-$70 in the coming months. Replyfleet
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
If I were the Chinese government, I would sit on the sidelines and watch the meltdown proceed. When prices got cheap enough, I would buy dry bulk shipping companies, steel, iron ore, copper, lithium, fertilizer, seed, and coal companies.The future is not in precious metals. It's strictly a hedge. The real danger is losing Park Place and Boardwalk.
Just a thought.
Reply
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
Jake Huneycutt:Since day one of the noble metals used as catalyst, cost has been an issue and research have been conducted to try to reduce the usage or find replacement. So there is nothing news here. After decades of effort to thrift usage of PGM metals, progress has been slow and unreliable. For example the so called silver catalyst converter has been in research for almost two decades and it's not going any where. Auto makers must strive to make a durable catalytic converter that meets or exceeds the EPA requirement, otherwise a massive recall, if it becomes necessary, will be much much more expensive.
The article you cited clearly sounds like a propaganda piece as it puts together all pieces perceived to be bearish for platinum, without much substance in reality. My opinion is the auto industry instead of trying to supress the PGM metal prices (and hence suffocate the supply), should simply accept the higher cost, as the higher prices will encourage development of more PGM sources from lower grade minerals. A vehicle costing one or two extra grams of PGM metals in the cat converter, will have that much higher resale value consider that the recycle value of the cat converter is that much higher. So at the end of day it really does not cost more.
If I know a Nissan car has a cheaper catalyst converter containing a few less grams of platinum, I might feel I need to ask the dealer to cut my price a hundred bucks exactly for this reason!!!
You might also want to read Platinum Today's "Our Views On...", which addresses your questions:
www.platinum.matthey.c...
Reply
fleet
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
It's almost Xmas. Time to buy some coal for your stocking. ReplySome True Safe Havens Are Still (Surprisingly) Undervalued [view article]
Beware of gurus who say always or never. ReplySome True Safe Havens Are Still (Surprisingly) Undervalued [view article]
Thank you to Mr. Anthony for his response to my inquiry. Obviously, Mr. Anthony’s words and the failure for others to corroborate accusations made speak volumes.Mr. Anthony, you are an exceedingly bright and talented poster and your work is sincerely appreciated!
Reply
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
You have answered alot of my questions but u have made me raise more questions after reading your article. What is ur take on shipper stocks like drys, dsx, fro, nat, egle? Do you think they will be bullish in the near future or the opposite? Do you think they are undervalued? If they are, which one do u recommend? Hopefully u answer my questions. I will check back later. ReplySome True Safe Havens Are Still (Surprisingly) Undervalued [view article]
that is the longest article on Alpha i have ever read. Took me a while but it was well worth it. I think his analysis is not only deep and insightful but also very educational. He applies the darkhole and intrinsic value very well. Wish i can read all his other articles on alpha. Hopefully they are not as long as this one. ReplyHuneycutt
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
Mark,I always enjoy reading your analysis, but I'm curious about your views on steps that some automakers have taken to reduce palladium + platinum consumption in catalytic converters.
blog.wired.com/cars/20...
www.nano.org.uk/news/j...
It appears that both Nissan and Ford have had some success in reducing consumption of PG metals. Reply
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
This is a great article, well above my freshman level of investment research. I would, however, take exception to your comments about global coal demand /supply being in balance as far back as June. I would agree that domestically we may have been in balance as late as a year ago but it was then that demand for worldwide demand for met coal turned in to worldwide demand for ANY coal. Shifting policy in China, Thailand, Vietnam and other developing nations called for a reduction/elimination of exporting their own domestically produced coals while dry bulk shipping rates soared forcing worldwide shifts in buying patterns to meet growing demand in India. US coals became the swing coal winner: prices almost tripled and for the first time since 2005 producers were successfully negotiating multiyear contracts both demostically and internationally. To think that the same coal that sold for $39 per ton FOB rail car in early 2007 (the last cycle low) sold for $139 last June is unbelievable, yet accurate!Prices have recently pulled back to only a double of the highs seen in 2005 (the last cycle high) but a large percentage of US eastern production has been booked at higher prices into and through 2009 and 2010. That doesn't mean your prediction of continued deterioration in stock prices won't continue.. market psychology is an animal I am yet to understand...but given the backlog of very healthy pricing for the next 24 months I can't help but believe earnings will be exceptional. This should be particularly true of those who have a position in met coal.
Thanks for the opportunity to respond! Reply
schutte
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
People with negative comments clearly don't understand nor even try to understand what is happening right now. Sometimes in the short run, the price of something keeps on dropping, but in the medium run, it becomes your life line (like a parachute). Replyschutte
Some True Safe Havens Are Still (Surprisingly) Undervalued [view article]
Excellent and refreshing article. Thanks Reply