Seeking Alpha

ramisle

ramisle
Send Message
View as an RSS Feed
View ramisle's Comments BY TICKER:
Latest  |  Highest rated
  • The Dry Shipping Industry Is Going Parabolic [View article]
    Thanks for clearing that up.
    It isn't my contention that the stockpiles are restricting the imports. I've stated several times that deliveries are at record levels.
    It has been my theory that in 2013, the usual restocking of ore before winter was at an even higher level, because on top of the effort to rebuild inventories at the steel mills, there was also a lower than usual inventory at the ports at under 70 million tons.
    I'm suggesting that the smaller amount of ore shipments in the first half of 2013, led to the higher rates, and higher congestion in the second half of the year.
    And suggesting that since this year has had higher amounts delivered in the first half, and in a consistent delivery schedule.
    That over the next two months, there will be a rally, but a more muted one than last year.

    And, the fact that RIO and BHP have shipped so much, at the apparent expense of the shipments from VALE.
    Nov 4, 2014. 07:39 PM | Likes Like |Link to Comment
  • The Dry Shipping Industry Is Going Parabolic [View article]
    Really?
    An awful lot of analysts and shipbrokers quote the inventory numbers, including Commodore Research.
    So, if you want to quote Commodore Research, then I'll do the same.
    Here he supports the idea that inventories do effect the dry bulk rates.

    "Landsberg, who gathers his numbers from steel-industry sources in China for his own research shop, Commodore Research, pointed all this out, at the time, in a report. Increasing supplies of iron ore at the ports, where it awaits shipment to steelmakers, along with rising inventories of completed steel, would likely lead to a short-term drop in iron ore demand over the next few weeks, Landsberg wrote.""

    He also uses the very low inventories from 2013 as a major contributor to the big spike in rates last year.
    I could also provide quotes from dozens of analysts who say inventory levels have a profound effect on rates.
    Yes, 100 million tons is only 27 days of supply.
    But when inventories fell 40 million tons below normal last year, it represented over 200 Capes worth of ore that needed to be shipped in a few months before winter.
    Add that to the millions of tons that is shipped in a normal month in the second half of the year, and it is enough to really give rates a boost.
    Which is what happened last year.
    Which is why the rally started much earlier last year.
    Nov 3, 2014. 07:34 PM | Likes Like |Link to Comment
  • Update: DryShips Sinks Its Battleship With Dilution [View article]
    The author spends a lot of time boasting about his calls.
    Although I don't see a reference to his call last year to buy GNK.

    And he seems to have missed the fact that on Oct 13 he said to avoid DRYS at $1.48.
    And yet anyone that bought it then would have had a nice run to $2.11 shortly thereafter.
    Now he says to avoid it again at what, $1.50 to $1.60?
    Just as the BDI is starting to crank up it's yearly 4th quarter rally.
    Tanker rates are healthy, finance rates just got reduced, and the ORIG dividend looks safe.
    The dilution was huge. The worst one yet from a company that has wasted millions of dollars from former dilutions.
    But timing is everything with this stock.
    Seriously, who else besides traders would touch this stock?

    The thing about making money with trading DRYS, is to be fully aware of the self serving, shareholder destroying, moves from George.
    But don't let it keep you from making money on the cyclical, seasonal volatility.
    Just don't get greedy. The good times are short lived.
    Oct 28, 2014. 08:52 PM | 3 Likes Like |Link to Comment
  • Eagle Bulk Shipping - Bankrupt Security Trading At Significant Discount To Recovery Value [View article]
    ""Extrapolating the average value for a 7-year old vessel (the average age of the Eagle fleet) would yield a value of approximately $22 million per vessel. There are 45 ships in the Eagle fleet, which would equate to a fleet value of $990 million. This is obviously a simplified analysis"""

    Yes, far too simplified.
    Do the work, a 10 year old Supramax, built in Japan just sold for $16 million.
    You can't just take the "average age" and work that out.
    And two of them are 15 year old Handies.
    A small Supramax built in 2001, which EGLE has 6 of them, are worth $12 million. Which brings the average value down far more than the average age.
    I'm not sure why I'm doing this, because I still find the value of the fleet has nothing to do with the stock price. Now if the company can earn a profit with Supra rates at an average below $10,000 then I'll be impressed. And no I'm not the least bit impressed with the countless projections about a turnaround in rates, "coming soon".
    Those projections have been there every year, and the've been wrong. They will continue to be wrong because the fleet will continue to be oversupplied.
    Remember, this was "projected" to be the year when supply would equal demand?
    Well shipments are up 10%, and rates are lousy, worse than last year.
    The Dry Bulk sector needs more than the new deliveries to match the rise in demand. It needs total capitulation, no more new orders, and huge demolition, to work off the 20% oversupply. (Clarkson's estimate).
    Capitulation would take for rates to be absolutely awful, for a long time.
    And the shipowners are not going to suddenly be rational, and stop ordering. If they were, why didn't they do it yet? 2013 saw more orders than the previous three years combined. And the big money was there to help them. Some people insist it's because the money sees a bright future. I guess they saw a bright future when those ships ordered in 2011 were delivered in 2013 to the lowest rates in 20 years. So much for "Smart Money".

    EGLE has 17 ships that are older than 10 years, and will have a tough time competing with the new Ultramax.
    Here are some recent sales of Supramax from the last month.
    2011, 56k dwt. $20 million, ( built China)
    2009, 55k dwt. $22 million, (built Japan)
    2008, 54k dwt. $16 million, (built China)
    2008, 54k dwt. $21 million, (built Japan)
    2007, 54k dwt. $16 million,
    2006, 52k dwt. $18 million,
    2005, 53k dwt. $13 million,
    2004, 52k dwt. $16 million,
    2002, 51k dwt. $13 million.
    The value of their fleet is at best $880 million. That is valuing all 20 of their 2010 and 2011 Supras at $24 million each.
    Oct 7, 2014. 12:52 PM | 2 Likes Like |Link to Comment
  • Eagle Bulk Shipping - Bankrupt Security Trading At Significant Discount To Recovery Value [View article]
    For the last six years there have been endless articles talking about the NAV, and the book value of the dry bulk stocks, as if the stock price should or would someday reflect those lofty numbers.
    It's got to be one of the worst ways to evaluate these companies. Lots of people have gone broke trying.
    EGLE is all Supramax, and one of the most over supplied segments of the market over the next few years will be that size ship. A massive amount of Eco-Ultramax have ben ordered. A little bigger, and a lot better.
    And the one thing traders should have learned over the last six years, is that oversupply means everything.
    But, some never learn.
    Optimistic estimates for rate recovery have been forecast every year for the last three years, especially 2014.
    How's that working out so far.
    Oct 4, 2014. 06:14 PM | 1 Like Like |Link to Comment
  • What Is Happening With DryShips? [View article]
    FREE is a penny stock financial disaster.
    It has no redeeming value.
    It has no similarities to DRYS but for the dry bulk sector that they both belong to.
    FREE sells it's ancient, small, obsolete, ships off at a loss, in a arrangement with lenders so that the lenders can get out with losses and their tails between their legs.
    All the planned mismanagement at DRYS still pales in comparison to the inept management of FREE.
    FREE doesn't have stock in ORIG or any other lifeline to bail them out. FREE has multiple reverse splits and endless dilution.
    Enjoy life under the threat of delisting.
    And if you own it for more than 15 minutes at a time, you flirt with losing everything.
    FREE is a joke.
    I can't believe you would seriously bring that garbage into a serious conversation of dry bulk.
    How many reverse splits does it take to put that trash, and it's "shareholders", out of it's misery.

    I'm not sure, but have I adequately expressed my utter disdain for that stock sufficiently?
    And it's not an emotional response, it's simply a fundamental analysis of a fraud. One of the few dry bulk stocks that I never bothered to buy.
    Sep 24, 2014. 08:36 PM | 3 Likes Like |Link to Comment
  • What Is Happening With DryShips? [View article]
    I trade it, but always a quick trade.
    The rally I was talking about, is for the BDI. I can't say how the stock prices will react to the BDI. They usually rise on a meaningful rally in charter rates. But, they are seasonal, and momentum trades.
    And each stock has company specific events that would separate them from the crowd.
    I won't give the market enough credit for understanding the sector.
    For instance, the BDI rally last summer was almost entirely because of Capes, at least the first half of the rally. And yet a company like EGLE, who only own Supramax ships was one of the leading gainers. And they were, and have been in horrible financial shape.
    I discuss mostly fundamentals. And I try to avoid trading advice.

    Except for one piece of advice.
    Be careful. It's only a profit if you take it. The expected fall rally is almost always followed by an end of year/ or January, crash.
    Sep 23, 2014. 06:23 PM | 4 Likes Like |Link to Comment
  • What Is Happening With DryShips? [View article]
    Let me elaborate on what srafael is stating.
    This rise in production from the big three miners is designed to put the higher cost, smaller miners out of business.
    And to also put the high cost Chinese miners out of business.
    It may surprise some that the domestic mines in China could have a higher cost basis, but it is because Chinese ore is poor quality. Roughly 30% FE content, as opposed to the 62% FE ore from the big three. So the refining process makes for a $90 per ton break even for the independent Chinese miners. Roughly half their mines are government operated, have lower costs, and refine it to a comparable quality.
    As for the big three slowing production because they might lose money, it's not going to happen. RIO has a break even cost of $42 per ton. BHP is slightly more.
    And VALE has higher tonne mile shipping costs that bring their break even up a bit. Which is why they built the Valemaxes, carrying 400,000 dwt.
    So, the end result is that even if China slows it's demand for iron ore, the big three make up for it by replacing the huge amount of ore that was produced domestically. Demand drops, and yet imports rise. In fact, imports are up 10% YOY.

    As I've tried to point out all year. The difference between this year and last is that last year the inventories at the ports was at 65 million tons, leaving plenty of room for speculative deliveries. They grabbed a lot of ships last summer.
    This year, the inventories at the ports has stayed above 100 million tons. And with the price drop, speculators have lost their shirts, and have no place to put ore, unless the steelmakers take delivery at the mills, which they aren't doing.
    In the fourth quarter, the steel mills will restock, there will be a rally. But it may be muted by those inventories, and they are still oversupplied with ships.

    Sorry, that was more than elaborate, that was long winded.
    Sep 23, 2014. 04:30 PM | 4 Likes Like |Link to Comment
  • Why DryShips Looks Ripe For A Turnaround [View article]
    The current stockpile of around 112 million tons would be 28-30 days supply for the steel mills.
    That is if the ore was removed on an orderly basis, based on the demand from mills.
    But it doesn't work that way. Some of the inventory , depending on who owns it, will sit there waiting for the highest price. Or is serving as collateral, and will sit there for awhile.
    Storage isn't free, and it isn't cheap. Some traders will lose their shirts, and the ore will be sold off.
    The steel mills have their own inventories at the mills.
    The port inventories are very often owned by traders, speculators, the miners, who also ship first, sell later.
    The reason the port inventories are so high is that the miners are holding back on buying for many reasons.
    Waiting for a lower price.
    Waiting for a line of credit.
    Waiting to clear inventory of finished steel.
    Chinese steel makers have been losing money for years, the government must be keeping them going.
    China is a different kind of Capitalist. The government is always involved, and manipulating, and assisting, to keep the whole mess running.
    Sep 14, 2014. 07:47 PM | Likes Like |Link to Comment
  • Why DryShips Looks Ripe For A Turnaround [View article]
    Well, actually iron ore imports to China are up 10% over last year.
    The difference this year is, that the port inventories are over 100 million tons, and inventory at the mills is low.
    The cost basis on the port inventories is very high. Some of it serves as collateral on purchases of more ore. It gets complicated.
    I still look for a 4th quarter rally, but those port inventories represent about a months worth of supply.
    Steel demand is sluggish, but that's nothing new. With the price of imported ore this cheap, they'll ship it, someone will buy it, and domestic miners are shutting down.
    There are more than enough ships out there to handle this, still.
    But, eventually, there won't be enough ships, in the South Atlantic, when Vale needs them.
    Or, RIO and BHP want to hire everything available, to keep them away from Vale.
    And the grain season has the potential to be huge this year.
    And the the BDI will rally. But not for long.
    Sep 13, 2014. 08:04 PM | 1 Like Like |Link to Comment
  • Why DryShips Looks Ripe For A Turnaround [View article]

    """We haven’t really had any global infrastructure development since the financial meltdown in 2008""".

    While it hasn't made any headlines as a development, the global seaborne transporting of wet and dry bulk products has DOUBLED, since 2008.

    Google it.
    Sep 12, 2014. 06:39 PM | Likes Like |Link to Comment
  • Why DryShips Looks Ripe For A Turnaround [View article]
    I was one of the shareholders who were richly rewarded when DRYS hit a high of $131.40 back then.
    That doesn't negate the litany of self serving moves that destroyed anyone that held the stock after that.
    I'll have to assume that you are unaware of the fact that George in the second half of 2008, George, the CEO of private company Cardiff, sold 13 ships to George, the CEO of the publicly traded DRYS, for prices that were at the top of the market. Then, the orders were cancelled, and hundreds of millions of dollars were paid to Cardiff in penalties.
    To those apologists for George, who think that it was an honest mistake. George with his huge ego claimed in an interview the next year that he saw the downturn coming, and put the Capes on long term charters.
    Well, the Capes were put on long term charters BEFORE the sale of the ships.
    George and his sister own 100% of Cardiff.
    Shipbrokers called the penalties excessive, even if they weren't related party transactions.
    DRYS shares went from 40 million shares at that time, to 450 million shares today. Much of that money being wasted on continuing to purchase ships, and drastically overpay for his nephews company, (Oceanfreight), and more cancellations of ships.
    That's how you get a well deserved reputation for destroying shareholder value.
    It's stunning how people are so forgiving of a CEO, once they own the stock. There are several companies that handled the downturn far better than that. The Navios companies, and Diana for example.
    So no, DRYS wasn't just an unavoidable victim of the global crisis.
    You want to call the ORIG purchase a brilliant move? You'd better look at the total cost of the deal.
    They own $1.4 billion of a drilling company.
    And it only cost them $2.5 billion to get it.
    DRYS is a good trade. And if George starts working FOR shareholders again, they could do very well.
    Sep 12, 2014. 08:04 AM | 2 Likes Like |Link to Comment
  • DryShips: It's Investors' Own Fault If They Don't See The Value In DryShips [View article]
    If you are literally talking about someone buying the entire company, and selling off the pieces, forget it.
    George has a poison pill on both companies.

    These valuation theories have been around as long as contrarian investors.
    DRYS used to own 97 million shares of ORIG that were worth $1.7 billion.
    It didn't keep DRYS market cap from falling under a $billion.

    The contrarians have been pumping dry bulk and coal stocks for years.
    I'm surprised they can still afford a broadband connection.

    DRYS will improve soon. The dividend from ORIG helps a lot.
    George will not sell ORIG to pay off the debt. He will maintain as much debt as the lenders will allow, he always has.

    But all this hype about the dry bulk turnaround is missing the reality that the fleet remains oversupplied. And the order book for dry bulk has again reached a point where the fleet will remain oversupplied.
    700 more dry bulk ships for 2015, and 600 more for 2016.......and growing.
    These guys never learn. And once private equity got involved......

    Enjoy the usual fourth quarter rally.
    And watch out for the usual first quarter collapse.
    Aug 8, 2014. 02:02 PM | 1 Like Like |Link to Comment
  • DryShips May Not Be Capable Of Overcoming Weak Chinese Demand And A Large Debt Load [View article]

    ""I would say it should be brought up in EVERY article.""

    Only if they can manage to get the numbers right.
    Aug 6, 2014. 03:50 PM | Likes Like |Link to Comment
  • DryShips May Not Be Capable Of Overcoming Weak Chinese Demand And A Large Debt Load [View article]

    The author has done little to no research.
    And whatever he did read, he certainly didn't understand.
    Such as this little gem:
    """Morgan Stanley commented on the falling iron ore shipments saying that with China cutting production, miners are shutting down every day with cheaper supplies increasing overseas."""

    Morgan Stanley is referring to the fact that China is cutting production of iron ore, and Chinese iron ore mills are shutting down. The reason they are doing so is that imported ore has dropped to a price that is cheaper than what the domestic mines can compete with.
    And that leads to more imports, and more demand for dry bulk ships.
    If you are going to get alarmed at a slight decrease in imports for June, as opposed to May, (as expected).
    Then I guess you'll be really excited when October comes, and iron ore, and grain imports soar, (as usual).
    Just a small amount of research would have showed you the usual seasonal demand and fluctuations in the BDI.
    Yes, the consolidated debt for DRYS and ORIG did go up markedly. That's what happens when you take delivery of some Ultra Deep Water drill rigs, that cost around $700 million each. And earn around $600,000 per day. You didn't mention that.

    And when you buy the company DRYS.
    You get the dry bulk and tanker segment, that carries a ""debt pile"" of $1.6 billion.
    The rest of the debt belongs to ORIG, a different company, you know, the one that has the UDW drill rigs.
    And DRYS gets a nice $15 million per quarter dividend from ORIG, to help pay for that ""debt pile"".

    Debt Pile? Makes me want to check for something sticking to the bottom of my shoes.
    Aug 6, 2014. 03:43 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
731 Comments
775 Likes