Green Grass in the Summer Heat
As they say on the T.V. - Breaking news.
Wanted to get this blog in over the weekend as a "heads up" for those who are looking for a real opportunity in this confusing market. Haven't had time to get it in the form I would like, but if you are willing to do your research, I think you will find this to be a great investment, either for shorter term gains or as a longer term dividend hold.
I am refering to Diana Containership DCIX, which was a spin off from Diana Shipping in early 2010.
I realize that if you simply look at the stock movement in the last month or so, it will look like a "falling knife", but it is anything but.
When it was spun off, it had a value in the $12 range, and stayed in that range up until they announced a massive new share offering equal to about 4 times the size of the existing shares. Anyone who was holding at that time probably has a bad taste in their mouth, as it fell to the $6 range almost immediately.
In this case, this turns out to be a great opportunity for new investors, and even for those who were already holding if they buy more.
While all of this was going on, it was virtually impossible to find their website to get information on exactly what was happening, but it finally surfaced (even though Yahoo still does not show it in their profile section).
It is http://www.dcontainerships.com/
If you go to their website and look under the sec filings for the annual report, and are willing to wade through it, you can get a lot of information ( including a good feel for where they are now after the new stock offering ).
The first SEC filing on the list is very long and has more information than a human being should ever have to read, but it has some "nuggets" buried in it that are very encouraging.
They took in just over $121M. They paid off all debt. They have 5 ships paid for. These are mid-size vessels, of which 2 are new builds in 2010, and the other three are older ones. All are on time charters (mostly with Maresk) through 2012 and 2013. Charter rates are in the $20,000 to $21,000 range.
They intend to pay a dividend equal to 70% of available cash from operations.
The first dividend will be paid in August, but will not be as great as later ones, since it will be for a period when they had fewer ships at work for a shorter time then a full quarter. The November dividend will be more normalized.
They do intend to acquire more vessels ( and may issue more shares as well as incur debt to pay for them ), but as of now, their balance sheet will be very strong.
The people running it are also running Diana Shipping (which has a significant number of shares ), so Diana Shipping may start paying some dividends again, from the dividends they receive. Diana Shipping paid the $7.50 for their shares ($20M).
I don't have the time to do a pro-forma right now, but if someone wants to take the time and make the effort, it would be very worthwhile for a lot of people here.
The new shares were purchased at $7.50 each, including those purchased by Diana Shipping, so this price is a great place to jump in.
Has been upgrade to buy and outperform by several analysts, and has a target price of $11.50.
JMO and worth exactly what I am charging for it.
Have to go pick up my wife from work, since she is still recovering from a foot operation and can not drive yet, but thought this was something I needed to share.
Have a great holiday.