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Teacherman1 (42.66)

Dry Bulk-Get them while they're Cold

Recs

16

October 04, 2009 – Comments (10) | RELATED TICKERS: DSX , EXMCQ.DL , EGLE

To some this may seem like a really foolish move on my part, but luckily for them, I am not investing their money.

I have been watching DSX, EXM and EGLE for quite some time. Back in early August, I felt they were about 50% over valued and have been waiting for them to drop.

My trigger point for DSX was about $10.00. For EXM it was about $6.00, and for EGLE about $4.00.

DSX just would not drop and I don't expect it to do so significantly. EXM and EGLE are now within my "trigger range".

I will be picking them in my CAPS on Monday, and in real life as well.

I know, some of them have a lot of debt, and the BDI is not particularly favorable. They are not paying a dividend at this time, so there is no reward for holding, but I am a longer term investor (2-3 years) and since I can not pick the exact top or bottom, I am willing to watch the (sometimes wild) gyrations and fluctuations for the intermediate term to achieve what I believe will be a very good longer term return.

Each of them has taken some steps to improve their staying power during the downturn and I will be commenting on these in more detail in my CAPS picks.

I do not pretend to be an expert in the area of shipping, but I do know how to analyze financial statements and assess a companys potential.

I am not recommending them to anyone else. Do what you personally feel comfortable with, whether that be to ignore them, run screaming from my "insane suggestions", watch them for awhile, or take a small position then adjust over time. Do your own DD. (Hey I think someone else said that before)

As always, this is JMO and worth exactly what I am charging for it. 

 

10 Comments – Post Your Own

#1) On October 04, 2009 at 4:04 PM, Teacherman1 (42.66) wrote:

In the interest of full disclosure, my statement about picking them in CAPS and in REAL LIFE on Monday, would be delayed if for some inexplicable reason they opened 20% higher that day and stayed up. I would still pick and buy them, but would wait for a dip.

Have a nice weekend for what's left of it. 

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#2) On October 04, 2009 at 4:33 PM, dare1182 (< 20) wrote:

Teacher

    what you think of NM?

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#3) On October 04, 2009 at 4:50 PM, Teacherman1 (42.66) wrote:

DARE

I own NM and have since March. It is one of my favorite stocks. Well run, very smart management, very good longer term upside, and even pays a good dividend while you wait.

The only major drybulk I wouldn't touch now is DRYS. I already made my "slot machine" pick with PNX. If I decide to get out of that, I may take a small position in DRYS just to elevate my blood pressure and have a reason to watch what weird and unfathomable thing their managemant might do next.

If and when things get better, they may get lucky and hit it big, but I wouldn't bet the bank on it. 

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#4) On October 05, 2009 at 11:44 AM, CaptBS (96.08) wrote:

Drybulk is exactly the kind of sector to have if you want to make an otherwise-stable portfolio more exciting... for better or for worse!

I did the DRYS dance earlier this year, and it was certainly a thrill-ride but not exactly the best trade I've made... It's probably a little ironic that, on the day I'd originally planned to sell my DRYS, I left for Vegas... without putting in the sell order... and it was on that same day that their management announced yet another dilution of common shares to help shore up their unfathomable debt. Whoops! Since then, I've averaged out of most of this position, but for some reason I can't resist maintaining a small amount of tightly-stopped DRYS just to see what happens... it's my stock soap opera of choice.

I do like NM for the long-term upside and hefty dividend yield, and I've picked them, EGLE and EXM in CAPS. For someone with a 2-3 year time horizon and a tolerance for volatility, they're all pretty good outperform picks to hold (along with DSX, of course).

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#5) On October 05, 2009 at 11:55 AM, davion13 (< 20) wrote:

I would love to jump in to Dry bulk for the speculation/thrill ride/ increase heart rate, but after taking  50% off of a double on SIRI (so I'm only playing with the house's money right now) real money portfolio has all the excitement I can stand.  

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#6) On October 05, 2009 at 11:56 AM, davion13 (< 20) wrote:

However, if you're in need of a small aggressive sector, look no further.  

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#7) On October 05, 2009 at 12:01 PM, IIcx (< 20) wrote:

BDI has been up the last few sessions but take a closer look before jumping into the shipping sector long term; http://shipping.capitallink.com/ 

I think the last shipper MF recommended was PRGN. I don't currently own the stock but have traded in and out of it several times.

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#8) On October 05, 2009 at 12:11 PM, stan8331 (91.40) wrote:

All of them will probably do well if the economy doesn't crater, but my favorites are DSX and SBLK due to their relatively conservative debt positions.  They'll have geat upside potential if the economy improves, but won't be as vulnerable as many of the others if things go south again. 

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#9) On October 05, 2009 at 12:14 PM, Huayra (< 20) wrote:

I also looked at this sector about a month ago, but indeed the debt loads at most of these companies are a major obstacle at present and it may take a long time for demand and prices to pick-up.

 

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#10) On October 05, 2009 at 9:05 PM, Bays (29.94) wrote:

EGLE has a ton of long term debt.  Was just looking on their website and went to their "Fleet" section and saw a long list of ships being built.

Their fleet will actually be more than double than what it is now in less than three years.  They have a ton of debt, but are trading way below book value.   

Last time I bought a company like this (TCK-B.TO), I certainly did not regret it as it went from the 3s to 30.  

The question is will EGLE be able to whether the economic storm? If yes, this stock will take off well above their book value (9.80). 

From a quick glance at the numbers tho, PRGN seems like a better investment.  I'd have to dig deeper.

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