CT Programmer

Is it Time to Buy Dry Bulk Shippers?

Nice summary for investors who knows nothing about shipping. Otherwise, there's nothing new here. In a year or two, people will look back at today as a golden buying opportunity because ALL stocks are so undervalued (not just dry bulk shipping). The trick is buying companies that will survive the shakedown. Long-term contracts are good now, but they will expire in the near future as well and they'll lock in low long-term contracts, which when the shipping rates rebound will turn around and be considered a negative. I'm long GNK, and while I don't expect the current dividend to last, I think they'll survive the shakeout. When I say long, I mean 20+ years.

Will All Shipping Companies Suffer Equally?

I'm not saying things look rosy for shipping in the short term, but I will say this... Forbes must have a columnist dedicated to shipping, because it seems that I'm reading this "week-by-week" drop in the Baltic all the time from a Forbes article. Not trying to shoot the messenger, but when Cramer gets on and hypes a company I tend to listen very skeptically. I am now doing the same when Forbes pumps out their doom and gloom articles on shipping.

Looking Good: Genco in Particular, Shipping in General

You can pretty much count on reductions in dividends. Many of these guys are hanging on by the skin of their teeth, and the next year or two will be a period of washing out the weak. But I do agree that Genco is in a good position compared to the others. It has been riding a wave of 90%+ contracted fleet, and even though they recently wrote down $23M for the forfeited deposit on a fleet of new ships that they canceled, at least they bit the bullet, did it early, and kept losses at a minimum. When a bunch of the others go out of business and shipping picks up (which it will) they'll be in a very good position. But I agree with oneslip that there's no rush to buy, unless you want to just sit on the dividends (my guess is they'll cut those back to the 10% range to reflect the new stock prices). The price can ALWAYS go down, no matter how ridiculously low it is now. They MAY have bottomed, but my guess is they'll be hovering here for a while anyway.

Don't Let Bulk Shippers Sink Your Portfolio... For Now

When someone mis-spells "Genko" (it's "Genco"), it makes it fairly obvious that they don't really follow that stock, so I don't put too much weight in what they say. It's when companies are "stuck in the mud" that you want to invest in the strong ones that will survive the washout. A "slowdown" is just that --- a slowdown, not a collapse. Last time I checked ships were still transporting goods all around the globe. Now is the perfect time to invest --- when people like you are saying not to --- and hold until everything returns to normal. If you don't, by the time the "all clear" has been sounded, you've missed out on a lot of the returns. And I've collected my dividends while they've waited on the sidelines.