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memoandstitch (< 20)

Are dry bulk shippers going Greece?

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September 21, 2011 – Comments (3) | RELATED TICKERS: DSX , EXM , DRY

Investors around the world are feeling a lot of anxiety about Greece.  For investors in dry bulk shippers, the level of anxiety is just double.  Why?  BDI is still pathetically low.  Debt refinancing deadlines are approaching.  Nothing is going well for this industry.  

Today I looked at DSX.  Many of their charters are expiring between this year and next.  That means they will have to face the reality of low rate when they negotiate new contracts.  The stock price already reflects that by falling 34% this year to around 7.93 this morning.  or does it?

What are your thoughts? 

3 Comments – Post Your Own

#1) On September 21, 2011 at 12:16 PM, Teacherman1 (47.25) wrote:

I would suggest it would be good for a long term hold if bought at the right price.

Perhaps small increments on the way down, then rest when you get as much as you want.

This would assume you won't need to pull your money out of the market at an inconvenient time.

If DCIX is able to generate good income and pays a good dividend, then DSX would get some of that to help them wait it out.

They have a conservative balance sheet and don't appear likely to go out of business.

It is very likely they will be one of the survivors if and when the usage and rates tick up.

If the world economy totally tanks, and the rates never come up from here, you will have a whole lot more to worry about then owning some shares of DSX.

I sold out of my position in DSX because they are not paying a dividend (which was a strategic choice on their part to help them survive), so they were getting beat down.

I will likely go back in light when they get to a price I like, and will look at adding if they keep falling.

I will do this with the understanding that what I invest in them will likely be "dead money" for a long period of time, but has a good potential upside in the long run.

There are better opportunities in other shipping stocks in the meantime, and DSX is not going anywhere, so sitting on the sidelines with this one will not likely be an opportunity loss.

JMO and worth exactly what I am charging for it.

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#2) On September 22, 2011 at 2:25 AM, memoandstitch (< 20) wrote:

Every shipping stock looks very much like a Greek bond.  They are selling at a deep discount but they are also likely to default.

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#3) On September 22, 2011 at 9:53 AM, Teacherman1 (47.25) wrote:

#2

That statement is true for some shipping companies, but it is a little extreme to apply it across the board.

You are of course entitled to your opinion, just as I am to mine.

Time will show us which was right.

JMO and worth exactly what I am charging for it.

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