Tallulah

Genco Shipping: A New Bubble in the Making?

Ole, thanks for the response, 1.) Do we have to worry about shipwards going under, from the 3rd quarter Genco conference call they discussed this as a very real possibility. Especially as you mention that no new orders have come in during the last few months.

2.) Prior to the market collapse the average number of vessels traded was approximately 30-50 a month, I hardly consider a handful of sales significant. I was unable to find any information on the sale of the Lacerta from the DRYS website, the last information they present is the sale the vessel was cancelled at a rate of $55 million. Perhaps they haven't reported it to the SEC yet.

3.) While I am sure that a limit to the number of ships that can be scrapped is true, I am unsure of where you got your fact that scrapping can not be higher than newbuilds.

4.) You say it is too late for cancellations, however on Nov. 4th 2008 Genco cancelled 6 ships that were going to be delivered in 2009, including 3 that were to be delivered in the 1st quarter of 2009 resulting in that case of only a 5 month lead in order to cancel the vessels. While I agree many of the 2009 vessels will be delivered, companies still have plenty of time to cancel.

5.) I admit I missed your calculation of the Hadrian, your use of numerous timeframes had me mislead.

Genco Shipping: A New Bubble in the Making?

Itsonlymoney, I do not fault the author for his short position, I fault the author for publishing a misleading article with very suspect facts for personal gain.

As for your concern about authors publishing glowing articles, some analysts refuse to take a position in a stock they cover in fears it may bias their judgment on a stock or industry.

Genco Shipping: A New Bubble in the Making?

Your article is wrong for a few reasons, I will point out just a few;

1) its based on the opinion that the current selling rates for vessels is going to be the norm going forward. If this is the case, then no one would ever order another newbuild again since it would be cheaper to buy a 5 year old ship instead. What will this do to supply and demand.

2) Very few ships have actually been sold at these levels, and the companies that are selling were doomed to begin with, they had failed business plans.

3) You failed to look at the amount of ships that are over 20 years of age and are likely to be scrapped in the next few months (or that have already been scrapped since your date of 9/30/08)

4) As a previous poster commented, the amount of cancellations that are going to hit in the next year of so to the order book. Easy money would say a large portion of these ships will be cancelled.

5) Using out of date information is in poor taste, for someone that is invested in the stock, I would have expected you to know that the Genco Hadrian was delivered and they have a 4-5 year charter on it. You should have included that in your analysis.

I appreciate your attempt to influence the stock for your own personal gain, but you should have done a better job with your analysis.