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DryShips: Sell On Temporary Lawsuit Denial

Jul. 10, 2017 5:04 PM ETDryShips Inc. (DRYS)62 Comments
Bill Maurer profile picture
Bill Maurer


  • Motion against dilution denied.
  • Share count will continue to soar.
  • Reverse split likely coming.

Last week, I cautioned investors that I didn't see much in the lawsuit against shipping firm DryShips (NASDAQ:DRYS) and its CEO. With the company outlining all of its plans through SEC filings, I thought that we would continue to see massive share dilution continue. Well, after the bell on Monday, the company announced this important update on the situation:

DryShips announced today that an application for a temporary restraining order filed last week in the Republic of the Marshall Islands by a plaintiff against the Company and its chief executive officer and chairman of the Company's board of directors, Mr. George Economou, has been denied. The temporary restraining order had sought to suspend any further issuances of new common shares by the Company at a price per share below the price specified. The Court ordered the parties to submit written memoranda concerning Plaintiff's application for a preliminary injunction, and if the Court should determine to hold oral argument, indicated that argument would proceed before the Court at 4:00 p.m. (Majuro time) on July 17, 2017.

That means that there will be at least one more week of share sales before the lawsuit continues its legal journey. Even though DryShips announced another quarterly dividend on Monday, shares lost almost 13%. Volume wasn't substantial, but if we average this many shares each day this week, I figure at least another 6 million shares will be sold to Kalani. That is in addition to what we've already seen in the past two months, seen below.

Now, it appears that DryShips' shares have rallied back over $1.00 in the after-hours session, but I don't see a reason for this. Especially, if the court strikes down the lawsuit completely, investors are looking at the share count tripling from here at the absolute least before the latest Kalani deal ends. Of course, we're likely to

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

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