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Teacherman1 (62.19)

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November 28, 2011 – Comments (10) | RELATED TICKERS: DCIX

There appears to be some erroneous information on some of the web sites concerning DCIX.

For example, the "street insider" shows their Q3 dividend of $0.15, as an "annual" dividend, rather than a "quarterly" dividend, and has them yielding 3%, instead of 12%.

Yahoo Finance has their Q3 information under "Key Statistics" (finally), but when it shows the dividend information on the bottom right, it has erroneous information which they attribute to Morning Star.

The BAC/ML analyist "downgraded" it to hold, but the rest of the analysists still show it as a "strong buy". I suspect the "downgrade" from the BAC/ML analyist has something to do with the fact that there was a change in the head of that section to a more "conservative" individual. I can't seem to find any information on why they "downgraded" it.

Jefferies "lowered" their price from $11 to $8, based on the fact that they did not accquire another ship during the 3rd quarter, but reaffirmed their "buy" rating.

Here on the "recap" page for DCIX at the Motley Fool, they show the dividend at $0.18, rather than $0.60, which probably has to do with where they get their "feed" from. It looks like someone took the Q2 dividend of $0.03 and added it to the Q3 dividend of $0.15, and came up with $0.18.

I am now going to let it go, but since the ex-dividend date is Nov. 30, I just wanted to make one more attempt to give a heads up to anyone who may be confused. I would hate to see them miss out on a very good investing opportunity to get a good yield from a company with a strong balance sheet.

I think that at least for the next 18 months, this is a winner.

JMO and worth exactly what I am charging for it.

10 Comments – Post Your Own

#1) On November 29, 2011 at 12:09 AM, shamapant (80.71) wrote:

And after the earnings release, it sounds like management is ready to buy another ship without dilutive financing! Sounds like...*speculation* the dividend might go up even further in future quarters. 

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#2) On November 29, 2011 at 12:55 AM, awallejr (82.72) wrote:

The problem with the shippers is it is still too early.  They still have a year or two of pain to go through because of all the overbuilding.  You have FRO, for example selling for under $3.  If you buy any, please be prepared to be extremely patient.  You will be sitting on dead money for awhile.

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#3) On November 29, 2011 at 9:25 AM, Teacherman1 (62.19) wrote:

shamapant - I expect the dividend will remain the same. It is based on earnings and cash flow that are already in place for the next 18 months. Even if they buy another vessel and increase their earnings and cash flow, I don't think they will be likely to raise the dividend. The payout this quarter was a little more than "earnings", but when depreciation is taken into consideration, they had extra cash to do it.

If you will notice, their cash position increased to about $48M, before the dividend is paid out.

awallejr- I agree with you for most shippers. However, in this case, DCIX already has it in place for the next 18 months. After that, anything could happen. They have no debt and $48M in cash. Their equity is $208M out of assets of $210M.

If Maresk was to cancel the charters (very highlly unlikely), then they would have some problems, but they have a good cushion to fall back on, which is something that most others do not.

DSX does too, because they have more cash than debt, but since they are not paying a dividend, they are not as likely to move up. I would be a buyer of DSX at the right price, even knowing that the price would likely "sit" for awhile.

JMO and worth exactly what I am charging for it.

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#4) On November 29, 2011 at 1:12 PM, broadwaynewyork (< 20) wrote:

Thanks for the information, Teacherman1.

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#5) On November 29, 2011 at 8:28 PM, HarryCarysGhost (99.76) wrote:

Hi Teacherman, hope you had a nice Thanksgiving.

Heres the #'s I came up with

Yield- 12.15%

Dividend announcement- 11-22-11

Ex date- 11-30-11

Payable div pr/qtr- 0.15

Date of record- 12-2-11

Payable date- 12-14-11

Soooo, if one were to purchase shrs at the average price of the day at $5 and held until 12-2-11.

That would be a payout of .15 pr shr. (from my understanding the share price would automatically drop by same amount) but (usually)  then recover.

So could'nt I then sell the shares and book the div. option B is set a sell price... lets just say $7 after the second div date.

I'm really tempted to try this.(ok,ok I'm trying it, normally I use the Buffett rule of disclosure)

Have you ever went this route with a similar stock?

Also are any of my numbers or thoughts incorrect?

All the best.

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#6) On November 30, 2011 at 1:04 PM, Teacherman1 (62.19) wrote:

Hi Harry

Our Thanksgiving was fine, even though my wife had to work, but at double pay, she was happy to. They even provided them with a turkey dinner, and she brought me home a plate.

Hope you and yours enjoyed Thanksgiving too.

Your numbers look correct.

Not sure why you would want to sell it right away though. That would give you 3% for a short hold, but the real value is going to be in price appreciation.

If you notice, the price is currently being controled by just a hand full of shares by day traders. I think it comes out to something like three tenths of one percent of the float, and likely even less because they probably buy and sell throughout the day.

The book value is about $9, and the underwriters who bought about 75% of the new issue, are in at about $7.50.

I think it is very reasonable to see this go up to the $7.00 to $7.50 range, and maybe even higher, depending on what kind of yield people are looking for.

In the meantime, you get a 12%+ yield to hold it while it goes up.

At some point, the financial websites are going to have to get the information updated, and corrected, and as it gets more visibility, I think we will see it move.

Of course, I could be wrong. There are a lot of investors who seem to think that what's happening in Greece has a direct bearing on the "Greek Shipping Companies"; even though they are incorporated in other countries and do little to no business with Greece.

I think that for now, the institutional investors are content to just take in the dividend, which even at the $7.50 price, is yielding 8% on an annualized basis.

I will take some profits as the price rises, but would hold most for at least a year, unless something very unexpected happens.

If there is a significant share price drop after the dividend is paid, I might buy some more, but I really don't expect it to do that.

I got my $0.30 a share from TEU today, and then sold 25% of my position, for a combined profit of about 35%, in about 8 weeks.

I bought them before they started their "run up", just like DCIX. Of course, they are still yielding about 12%, even at this price, but they don't give me the same comfort level as DCIX.

That's only because their balance sheet is not as strong, and the history of the PRGN management, (which they were spun off from). 

Right now, I am trying to get some DSX, even if it's not paying a dividend, but it just won't drop down to what I want it at.

Have fun in this "topsy turvy" market, and don't do anything you don't feel comfortable with.

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

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#7) On December 14, 2011 at 10:20 AM, broadwaynewyork (< 20) wrote:

Teacherman, perhaps I'm being a bit naive; however, it seems the confusion on all the various outlets as to the actual dividend yield on this one might be hampering potential share price appreciation.

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#8) On December 28, 2011 at 12:46 PM, HarryCarysGhost (99.76) wrote:

Hi Teacherman,

And a belated Merry Christmas to you and yours.

Just wanted to tell you what I did with this stock, did'nt do the green checkmark on caps since technically I never owned it.

My Mother opened up an account with two grand and basically said go make me some money kid. I had more than a grand in profit from last years Silver trades just sitting there.So I needed a penny stock to trade and this fit the bill.

Bought 200 shs at $5.00 needed to buy then to get the ex date even though I knew it would drop to at least $4.85.

Waited it out collected the divi and sold 175 shrs at $5.30. will it go higher over time probably. But like I said I was just trading this. Really don't like containerships, and I don't want to be the one holding the bag.

I spent all last yr teaching myself TA.And it was at the top of the trend line.

OK, I was'nt even comfortable doing this,So I don't think I will again but who knows for sure. For my stocks I'm much more comfortable DCA and DRIP'ing with KO.

Best. 

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#9) On January 02, 2012 at 11:53 AM, Teacherman1 (62.19) wrote:

I understand Harry, especially since it was your mother's money. I would never encourage anyone to invest in anything they don't feel comfortable with.

Just as an update, they have bought two more ships which will be delivered in Jan or Feb, and they come with 3 year charters which will provide just under $16M in increased annual revenue.

They also signed a $100M credit line, which may be increased to $150M.They did not have a credit line in place when they were "spun off", and this was the primary reason they had to issued so many more shares; resulting in the price drop from the $12 range, down to the $5 range.

The only unknown right now is how they structured the purchases, as to how much was cash and how much was financed. The total cost was about $66M for the two of them. I expect we will get some more information when they do their Q4 earnings call.

I expect they will have used a combination of the two about 50/50. I am basing this on some comments made by DSX at their last conference call, and since it is the same managment, it will likely be in that range.

Of course, this will lower their cash position, but they will still have plenty to operate with.

I also expect they will keep the dividend at the $0.15 level, which they should be able to handle with no problem. They might even raise it a little, but I expect they will want to maintain enough cash to have flexibility for future purchases, and a cushion

I think this purchase of additional vessels is what the institutional investors and analyists were waiting for, so when the dust settles on that, I expect the price to take a nice "jump" up.

I think TA has it's place, but it is more accurate for more heavily traded stocks, with more history.

You might have an opportunity to do a little more "trading" when they give some guidance about the structuring of the deal, but again, do only what you feel comfortable with.

As I stated previously, this is not a buy and hold long term because anything can happen with the shipping industry, but I think it is pretty solid for at least a year.

They should be having one of their first ships coming off charter in the near future, so should be able to get an indication of their ability to renew at a reasonable rate.

Have a great 2012.

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#10) On January 03, 2012 at 7:41 PM, HarryCarysGhost (99.76) wrote:

Damn, I guess I should have stuck it out a bit longer. Your right that this does'nt really follow the charts very well.

Oh well at least she has 25 shrs at virtually no risk.

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