DSX Lover

DryShips and the Oil Rush

Stop trying to praise the acquisition of 30% in Ocean Rig. That was the most horrible investment that shareholder money could be employed for. OCR has two rigs, one which was down for almost 2 months last year, the company lost money and has tons of debt, it is not even clear of how the transaction took place. Did OCR issue new shares? and use the proceeds to pay off debt, obviously not, because the Financial Statements are horrible. Even with Rigs being leased at $600 to $700K a day, the company could not make a positive return for its investors, the Deep Ocean Rig market is strong, but OCR financial condition is horrible, and it doesn't appear to be improving anytime soon. Why overpay for a partial share of something bad, when there where RIGS in the market being dispossed and offered by Transocean Inc, after the merger with Global Santa Fe at much better rates because of anti-competitive reasons. Hercules bought two Drill ships, debt free at much better prices than the OCR partial investment. Georgios is not getting paid to diversify and waste the company's money, he should employ Dry's mula to pay off debt and do share buybacks, or Dividend payments. Until he makes the Balance Sheet, and stops making horrible investment decisions, DRYS will be the laughing stock in the DryBULK sector.

Diana Shipping: Prime Rebound Candidate

SBLK, has an old fleet. DRYS earnings are very volatile, any plunge in Spot rates, there goes the stock, aslo 1.25 billion Debt. PRGN, GNK, SBLK, and NM are highly leveraged with older ships. DSX is sound, the higher P/E does not reflect the company's strong capital, and with 50% earnings growth for 2008 is misleading, meanwhile DRYS will not grow EPS by 50% and has to serve that Huge Debt. Other carriers that pay higher dividends than DSX are leveraged 100% to 300% more, hey if DSX borrowed it could doubled its Dividend and still be superior, but that is not the way it operates. It is a more conservative company, and as long as Panamax Rates stay at 50K or more you can count on that 9% safe dividend. With 50% chartered for 3 years or more, Diana is safe, while all the others could get shellacked with Spot Rates dropping

Diana Shipping: Prime Rebound Candidate

I totally agree with this article on Diana. Diana has very low debt, the newest fleet in the industry, average vessel is under 5 years old with useful life of 25-30 years. With 19 ships, 6 Capesize ships chartered long term 3-6 years, all 13 Panamax Ships chartered 100% through Sept 2008, with 2 becoming available at the time of the grain harvest, where prices are higher. Diana discloses with great detail, who its customers, are, how much are they paying for the ship, and for how long, it updates the fleet deployment chart on the day the change takes place, unlike other shipping companies. It even provides a fleet positioning map to see where the ships are and where are they heading. With 9% Div Yield, and increasing earnings looks to be a horrible short.
Also the last 6 Panamax Ship charters will increase earnings for 2008 by over 75% of 2007. Just look at the rates
Ship 2007 Rate 2008 Term Charter
Erato 30,500 80,300 12-15 months
Dione 28,500 82,000 12-15 months
Protefs 31,650 70,000 6 months
Alcylon 22,582 34,500 5 years
Calypso 26,750 55,000 12-15 years
Nirefs Avg Spot(50K) 60,000 2 Years
Diana Shipping beats the Treasury Yield by 600 Basis Points, with upside potential, and stability.

DryShips Deserves More Love

If its so great why is he issuing 6 million shares? Oh I guess the shorts own those shares, or might as well short those too. ALso 1.25 Billion in Debt with volatile shipping rates makes it very risky. Why spend $400 million company money in JUNK (Ocean RIG) this isn't a mutual fund where you overpay for diversification, if he had used that MULA for Debt payments the stock would be doubled at its current price.

Dry Bulk Shipper Anomaly in Spot Pricing Creates Buy Opportunity

DRYSHIPS hit $66 today. Buy it when it stops going down.
Panamax SPOT $69K, Capesize $137K, today, if they stand for the next 15 days, DRYS will beat estimates for the next quarter. It should be a hell of a Run into the next earnings call. Just Hope George Economou don't do foolish things with the company's money, and bleeds the company's future like buying junkie assets at exhorbitant prices like OCEANRIG.

DRYS: Shipper of the Global Commodities Boom

I'm not on Dryships, because its going lower. When I drops to $70 I might buy it Depending on the BDI Index. George is a clown for bleeding the company's future for a stake in Ocean Rig. That huge debt will catch up to the company regardless of swaps or whatever hedge the company has, 1.250 Billion cost a lot to finance regardless of what you do. The BDI rates will not reach the high of November in 2007, and earnings will be lower, regardless of how many millions of capital gains does the company get from selling ships. There is no such thing as growth in earnings for 2008, 2007 was the peak year in rates, all the big charterers are already hedging with long-term charterers (Cargill, Bunge, BHP Billiton, Rio Tinto), Vale has been buying its own ships since last years, and I'm going to laugh when the BDI rates drop, and Drys fails to take advantage to charter long term. China can't be exporting 7.5% to the rest of the world, and expect to keep the whole world growth story to remain intact. I'm not a Bear, but these rates and commodities, have gone up too quickly. Millions have been made in the way up, but more millions will be made in the way down. Look at the hype in Apple and Google, and where they are at now.

Dry Bulk Shipper Anomaly in Spot Pricing Creates Buy Opportunity

Its $117 for a Capesize today, and the information that the rates are going up to $135 to two years is innacurate. Look at the deployment fleet on DRYS website and you will see that it has Capesizes for $76K per day on Spot, because those are the rates that the chartered got between Nov-Dec when the trip was booked. That is huge drop from the record $184K per day booked on the previous trip. DRYS Spot rates are so volatile also because of port Congestion, in some ports of Australia the waiting time is higher than 30 days so there's no need to rush the shipments if the bulks are going to be waiting for that long. DRYS has massive debt, and unpredictable earnings, that's why is not worth $120 today. The record earnings for Q4 will not be duplicated again, and if you look at the fleet deployment you will see that most of the Panamax Fleet is chartered at rates between $45K and $60K a day and not the $85K a day it got on Q4. According to analysts in the Capital Conferences the average for Panamax for 2008 is 55K and 105K for Capesize. So make your earnings forecast based on those, and not the 95K and $175 it made on Q4. The Chinese economy will cool off after the Olympics and with that 65% increase in Iron Ore Prices and 7.5% inflation, China is exporting inflation that the World is not going to be able to pay. All these risks are priced in the Stock.

DRYS: Shipper of the Global Commodities Boom

Hey long term investor. DSX just announced a 5 year long term charter for 50K a day on a Capesize ship that will be delivered either on Q4 of 2009 or Q1 of 2010. The 5 year charter is worth a minimum of $82 million, while the ship price oder is only $60 million, but it is most likely that the ship will cost between $110 and $135 by the time it is delivered do to the increases in steel prices. Still a heck of a deal, for a ship with a 25-30 year lifespan. It also has the highest 6 year charter, per day on a Capesize in its books, for 75K a day. By the time they get that 2009 delivery the company won't have any debt, and the dividend will be stable and growing, without fear of spot rates fluctuating like crazy.
ESEA looks good except, that it manages a very old fleet, with good cash flow for now, but most likely to have ships scrapped within the next 5 years, decreasing the earnings, cash flow and dividends. Older ships will be harder to charter in the future because they are not fuel efficient for the companies taking on the time charters.

DRYS: Shipper of the Global Commodities Boom

DRYS has seen its best earnings in Q4 2007. Q1 2008 will be lower, and so will be the rest of 2008. It will have to service that huge debt, with lower profits. The Ocean Rig investment was horrible, a 25% interest in a company with no profits and almost a $1 Billion in Debt. If George Economou wanted Rigs he should had bought two that were just sold from the GSF RIG merger, at much better prices instead of leveraging $400 million, for a 25% stake in a company that lost $50 million last year, with just $265 in equity and close to $1 billion in debt (Way overpriced). Those Rigs will not even make over 200K in net profit for the next three years at the higher rates which at 10 P/E would value the company at $2 Billion in 2009. George should had serviced the debt instead of leveraging the company for that JUNK!!!!!. If spot rates fall DRYS will fall huge. As for DSX, it won't even matter, because it has almost 0 debt, and stable contracts. We will see in 2009 when spot prices are weaker, and DRYS earnings are half of what they are now.

DRYS: Shipper of the Global Commodities Boom

Dryships cannot be compared with DSX. Dryships goes spot on all time charterers, which are very volatile, has over $1.250 Billion in Debt, which is very risky, and a swing in the BDI or in interest rates, can throw off earnings down the toilet. It will have to pay more interest in order to serve that huge debt. Aside the 65% increase in the Iron Ore contract from RIO accepted by the steel builders is well below the spot price, and those increases are beginning to show inflation in CHina with 7.5% inflation rate, those increases will not be sustained.
Analysts at capital Link shipping expect Panamax rates at 55K and Capesize at 105K for this year which is were they are at now, and well below the rates for Q4 experienced by the earnings in DRYS.
DRYS will be shorted a lot, because of BDI volatility and that huge Debt on the B/S which makes it very risky, its fleet is getting old also.
In the other hand DSX, has brand new ships, averaging less than 5 years old, only 100K in debt and long term charters which provide stable visibility along with an 8% dividend yield. 6 Capesize ships chartered for 5 years, with 2 Panamax at 2+years. 12 Panamax on short term in order to take advantage of strong BDI with only 2 of those ships with rates above the current BDI rates. It is a much conservative company, with a stronger Balance Sheet and high dividend, which is less likely to be shorted. Just look what is happening to DRYS today, and how DSX is stable.

DRYS: Shipper of the Global Commodities Boom

I'm afraid the estimates are way too high for the earnings for 2008, specially after Q4 2007 was a record quarter. I don't think DRYS is going to be able to meet Q4 results in the future, specially after it just 400 million of debt for an investment in Ocean Rig. With the Dry Bulk index stabilizing at around 55K a day for a Panamax ship the estimates are way too high and the stock could take another plunge, if it is not able to meet the high estimates. I'm Bullish on Drys but would like for it to come down at least 15 points before I buy it again. Carter Worth from Oppenheimer recently said that the stock is a good short because it jumped from $48 to $88 way to quickly. I wanna see some profit taking before jumping in again.