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Tastylunch (29.29)

SAY Goodbye to Dryships

Recs

26

January 28, 2009 – Comments (40) | RELATED TICKERS: DRYS

Abandon ship! Abandon Ship! Man Overboard!

CEO and Board Members First!

CAPS may have have missed Saytam (SAY) but CAPS nailed this one.

http://idea.sec.gov/Archives/edgar/data/1308858/000091957409001216/d959106_6-k.htm

 "Two of our leading banks, which collectively held $751.8 million of our indebtedness as of December 31, 2008, have notified us that we are in breach of certain financial covenants contained in our loan agreements, and we have been in communication with another lender that currently holds $650 million of our outstanding indebtedness regarding breach of loan covenants. Currently, we are in discussions with these and other lenders for waivers and amendment of certain financial and other covenants contained in our loan agreements. .. These restrictions may limit our ability to, among other things, pay dividends, make capital expenditures and/or incur additional indebtedness, including through the issuance of guarantees. In addition, our lenders may require the payment of additional fees, require prepayment of a portion of our indebtedness to them, accelerate the amortization schedule for our indebtedness and increase the interest rates they charge us on our outstanding indebtedness. We may be required to use a significant portion of the proceeds from future equity offerings to repay a portion of our outstanding indebtedness. If our lenders declare an event of default, our lenders have the right to accelerate our outstanding indebtedness under the relevant agreement and foreclose the liens on the vessels mortgaged thereunder."

"While we have recently sold 27.05 million common shares since October 2008, we may have to sell additional shares in the future to satisfy our capital and operating needs. "

In case you are wondering 27.05 million is over 50% of the shares outstanding.

They have also suspended the dividend indefinitely.

It's getting just pounded in After Market (down 20% of this writing). I don't like their chances of survival.

CAPS gave you plenty of warning on this one

you have to know when a guy like TMFEldrehad is willing to lose 1000 points on one pick that it is with conviction

http://caps.fool.com/Pitch/DRYS/25246/okay-its-time-i-finally-entere.aspx

" Okay, it's time I finally entered a pitch for this stock. I initially made this pick as a result of TMFOtter's pitch - but since I'm getting absolutely slaughtered so far (score well below -500, and getting worse lately as of this writing) I thought Fools might want to know why I haven't ended the pain yet.

Here's a little example of why:

Economou says DryShips' management owns 47% of its shares and that helps generate enough cash flow.

Huh? How, exactly, does the fact that management owns shares help generate cash flow? Silly me, I guess I always thought cash flow was generated by the business - you know, shipping stuff. Think the ships, or the people who hire the ships, care who owns the shares?

But it goes on.

"We do not intend to sell shares," he said. This means the company can put a big part of equity back into buying vessels. Economou added: "We can deliver more money for every dollar invested in the company."

Okay, I like to think I'm a relatively bright guy, but I'm left scratching my head here. How does not selling shares translate into more equity with which to buy more ships? If management sells shares, or doesn't, the same amount of equity remains within the company. Of course selling shares in a secondary offering will result in more equity with which to buy ships, but that's not what he's saying - he's saying not selling shares translates into more equity. I need some Dramamine, because my head feels like it's spinning from trying to understand this.

I could end there, but I won't.

During the summer of 2006, when rates declined, DryShips' stock price fell to less than 9 a share, one-fifth of its current price near 54.

Economou says people's reaction to the volatility of the market was harder to deal with than the lower rate itself.

"When the market is low, people tend to panic," he said. "Investors and bankers are less willing to listen to the company." Borrowing money during the period was particularly difficult, he says.


Oh, now I get it. Never mind that rates declined at the time and the company's fortunes are closely tied to the spot market rates. We should all just be sheep and listen to the company!

DryShips is also looking for a chief financial officer from outside the company, but within the industry, he says. Its CFO resigned in May.

Pure speculation on my part, but maybe the CFO left because he got too confused all the time by trying to figure out what in the heck Economou was saying. I know I sure did.

Source for quotes: http://biz.yahoo.com/ibd/070713/newamer.html?.v=1 "

 

and then of course there is Abitare's legendary scathing pitch (and you its  avet bad situation if both Abitare and Eldrehad agree as they invest very differently)

http://caps.fool.com/Pitch/DRYS/2648334/it-was-surreal-when-someone-as.aspx

" It was surreal. When someone asked why he was doing the deal, here–now, he actually said, basically, ‘Because Americans are the dumbest investors around, and there’s lots of liquidity in this market.’”

CEO Dryship, George Economou

The secondary offerings, plus the testing of the stupidity aka enthusiasm of the market with another "drybulk" shipper. Safe Bulkers (SB), a company with a record of FOUR EMPLOYEES! Unlike DRYS which has TWO EMPLOYEES! LOL!

http://finance.yahoo.com/q/pr?s=SB

http://finance.yahoo.com/q/pr?s=DRYS

Here is my post from 20 May 08.

I am not in the "dry bulk" industry. I have done my share of world traveling and I have never seen a shortage of ships. There are always plenty of ships parked outside the port waiting/hoping for a charter. If there was a temporary shortage, it is going to be cured by the severe recession in bound to the US and a slow down in the US' debt ridden, over leveraged, “consumption based” economy. ( ref Consumer Sentiment: Is the Worst Yet To Come?) The ships that are being built or utilized currently are getting ready to be parked and transformed to barnacle rust collectors. Many of their owners will cash out and file bankruptcy (George Economou's Alpha shipping, again?).

There is a reason many Top Fools gave Dryships an Underperform. You can take your pick of article and realize how funny this company is.

Curious George
Nathan Vardi 02.25.08, 12:00 AM ET

http://www.forbes.com/forbes/2008/0225/095.html

World's Scariest Stock: DryShips
http://www.fool.com/investing/small-cap/2007/10/29/dryshi......

Dryships’ Debut Shows Speculation,
Liquidity Trumping Experience
“It was surreal. When someone asked why he was doing the deal, here–now, he actually said, basically, ‘Because Americans are the dumbest investors around, and there’s lots of liquidity in this market.’”
http://www.weedenco.com/welling/archive/sb/v07i04sblogo.asp

There is a major commodity bubble. When it pops the first to get taken out will be the leveraged, cash short and the stupid, which includes many in the "Drybulk" sector.

Many think “drybulk shipping” is a commodity play. It is a consumption/transportation play. As the consumption, spending, construction slows so will this sector. Many of these shippers were single digit stocks three years ago, they will return there once the bubble burst.

A highlight from: Curious George

"Who are my investors? Computer models, hedge funds and some institutions that go in and make $10 and get out." So much for consensus. DryShips has been operating with two employees (Economou, 54, and his internal auditor) since his chief financial officer quit in May, the second to split in three years. The company's fleet is managed by Cardiff, 70% owned by Economou, which gets more than $7 million a year for its troubles.

"A family business, this. Economou's two former wives own a total 15% of DryShips. Chryssoula Kandylidis, his sister, holds 30% of Cardiff Marine. With proceeds from its initial offering, DryShips bought six ships that had recently been picked up by Kandylidis. Five were sold at cost, but DryShips paid his sister a $3 million fee. Economou says she made very little money on the deal and bore great risk.

Kandylidis' son, Antonios Kandylidis, is also in this cozy network. The 30-year-old Antonios is the founder and largest shareholder in OceanFreight (nasdaq: OCNF - news - people ), which raised $218 million when it went public on the Nasdaq last year. Cardiff helped OceanFreight pick up its first dry-bulk vessels, helps manage that fleet and shares office space with OceanFreight.

A rocky maiden voyage. OceanFreight had to clarify its reporting in October, announcing third-quarter earnings per share were really 7 cents as opposed to the 11 cents it had advertised a day earlier. In December Antonios fired his chief executive, who says he intends to sue for wrongful termination. Then OceanFreight's chief financial officer quit; Antonios took over both the executive roles. Within days of the fuss OceanFreight announced it was buying the first of two tankers privately owned by Economou for $112 million."

Of interest also many dry bulk shippers are unloading shares on the stupid:

Secondary Offerings, Debt, and Defaults

Minyanville Professor David Nelson and Minyan Peter were talking about secondary offerings today. Let's take a look.

Professor Nelson: Shipping Secondaries

One by one the Dry Bulk Shippers are reporting blow out quarters. However, another pattern seems to be developing under the surface. Shortly after reporting and getting a big bump from the EPS reports, they've been announcing secondary's. Last week it was TBS International (TBSI) and this morning it's Genko Shipping (GNK). "

 

All I have to say is "Safebulkers" and Seanergy are probably not far behind if the leader is this bad off. Careful shorting ay of these, they are prone towild swings. They may have very violent death throes.

 

Props to Abitare and Eldrehad and all the rest who called it out for what it is!

40 Comments – Post Your Own

#1) On January 28, 2009 at 8:02 PM, Tastylunch (29.29) wrote:

Incidentally "Safebulkers" always reminded me of this

Aren't all restrooms supposed to be clean??

In re: "Safe"bulkers If it's so safe why do you need to advertise it in your name?

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#2) On January 28, 2009 at 8:10 PM, binve (< 20) wrote:

Wow....  That is insane dude. Nice catch and nice post.

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#3) On January 28, 2009 at 8:44 PM, kdakota630 (29.56) wrote:

I just made my underperform pick. 

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#4) On January 28, 2009 at 8:47 PM, Tastylunch (29.29) wrote:

binve

thanks , DRYS is a laugh riot so its fun to follow.

kdakota630

I would think ti will play out well for you (and me), but you know how these beat up POS are they may whipsaw you pretty badly if it gets some wicked short covering.

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#5) On January 28, 2009 at 8:51 PM, abitare (35.58) wrote:

Tasty,

Good find and write up.  

High five fools all around. I am short this garbage again.

Also short the CEO's 30 year olds kids company, same plan/scam. Ticker: OCNF  Ocean Freight 

DRYS is down 20% in after hours tradeing. 

Who says the markets are not efficient after all? 

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#6) On January 28, 2009 at 8:53 PM, Tastylunch (29.29) wrote:

abitare

Thanks for the tip I'm not familiar with OCNF. I think SB and OCNF and maybe SHIP might be safer shorts in some ways that DRYS. Won't be as news heavy but probably trade in sympathy.

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#7) On January 28, 2009 at 8:55 PM, Tastylunch (29.29) wrote:

oh and kudos goes to you abitare for the killer pitch

Well I'm sad American Investors are losing money I'm glad another scammer is going away most likely.

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#8) On January 28, 2009 at 9:06 PM, XMFSinchiruna (27.47) wrote:

Excellent post, Tasty! That's some crazy you-know-what.

As long as we're documenting warnings:

http://www.fool.com/investing/general/2008/11/11/the-perfect-storm-will-slam-into-shippers.aspx

Unlike fellow Fool contributor [my buddy who's way too right every other time to even mention his name here :) ], I have some concerns about DryShips. While I applaud the excellent prices locked in for long-term contracts for much of the fleet, the risks of a debt load greater than five times the company's market capitalization, combined with remaining spot market exposure, are too hot for this Fool to handle.

I still pick Diana as the best bet to survive this turmoil intact.

Fool on!

 

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#9) On January 28, 2009 at 9:16 PM, anchak (99.84) wrote:

I am guessing we are going RED in CAPS enmasse tomorrow at the open.

Also Screeners are dumb - OCNF did fairly decent in the shipping sector - but you need to read thru the details to figure out the devil.

 

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#10) On January 28, 2009 at 9:20 PM, Tastylunch (29.29) wrote:

TMFSinchiruna

Thanks Sinchi! And props to you for your good (and entertainingly written) call as well.

Yeah legit shippers that survive maybe be a great way to play this post carnage. I agree Diana is worth looking at down the road.  They should gain tremendous market share when the credit super storm abates.

My concern with DRYS and one other fools shared was not necessarily their line of business but how they conduct it. 2 employees, blatant contempt for shareholders and huge debt loads is a recipe for trouble.

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#11) On January 28, 2009 at 9:26 PM, Tastylunch (29.29) wrote:

, anchak

Now that I see OCNF is below 5 bucks I am not going to play/investigate it anyway as it would be more difficult to short. Thanks for  the insight although I don't Abitare used a screener to conclude they were shady.

I think Safebulkers might be a better bet. I have a lot of reading to do tonight to see whether my hypotheis is correct but I remember their IPO (LordZ asked me to look into it if I recall and found them very suspect in their Propsectus). Good thing I'm snowed in.

I'm redthumbing SB and DRYS tmr, but there is hugh risk of getting screwed on the open since this would be post News and I'm not expecting a lot of points right away.Hwo knows they may bounce just beacuse they should go down. I'm doing it more as a CAPS service ( to warn people). Chances are DRYS will be hard to play tomorrow in real life.

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#12) On January 28, 2009 at 9:48 PM, JakilaTheHun (99.93) wrote:

This is one of the reasons I'm thankful for CAPS.  It helps warn investors of risks involved with companies.  I actually went thumbs up on here for DRYS at $22. Not a wise choice --- I made a lot of bad calls when I first started, but I've learned so much about investing and so much about valuation since participating here.  

Don't sob too much for me --- I actually came out about even on the trade on CAPS, as it was part of a broader strategy at the time (I went thumbs up on EXM, DSX, SBLK, and GNK at various points in time and made substantial gains on some). Plus, I've made a killing on all the drybulkers on my KaChing portfolio.  It even helped led to the formulation of one of major investment strategies - taking advantage of bankruptcy risks

But still, the reason I was able to play DRYS so wisely on that portfolio management app was because what I learned here. I'm very thankful that we have this community of vigilant investors to share info with.  Without it, I think there are a lot of us that might be a bit dopier when it comes to investing.  

And thanks for this blog, Tasty.

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#13) On January 28, 2009 at 9:50 PM, GoodVibe4Ever (< 20) wrote:

Great post and nice links. I bought DRYS last November in Real trades (big lot) and in caps. It's my all time best in caps and best trade in 2009 so far. I bought it at $3.50 (rock bottom) and I sold 75% of it for $12 and the rest at $16.50. On 01.08.2009 I pitched the following here on caps:

"Today, we have another heavy volume and heavy after hour activity. The 25% position I mentioned above is for sale NOW @ $15.80 and if no one gets it, it will be gone tomorrow at the opening. As I said, once it hits $16, I am gone. Be careful now from pump and dump agenda. Unless you have fast fingers, stay away. The gains have been booked and the liquidation will come ANY time. A stock that goes from $3 to $16 in 30 days is MADNESS. I love it but at these levels risk/reward is not in your side my friend. Move on or at least be patient. Current $15.45"

It's unfortunate to see people thinking that the old days of hedge funds are going to come back anytime soon.

GoodVibe

PS. I am shamelessly promoting my last trade. Click here. :) I hope it will benefit someone.

Economouin response to our Tastylunch:

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#14) On January 28, 2009 at 10:06 PM, Tastylunch (29.29) wrote:

TheHuney

No worries man, I know your thinking well enough that were speculating not investing on this sort of play. I can tell you know how the wall street game is played.As long as a long wasn't fooled by what he or she was buying than the market is working.

Sorry you lost/will likely lose points but I'm glad you made bank as well in kaching. Those bankruptcy plays sure can double quickly on reprieves can't they? I'll have to read youra rticle more deeply, looke like an interesting strat if you spread your risk out enough and keep your bets small.

Nice Hat btw

GoodVibe4Ever

Now that is one heck of a trade. High risk but hey the reward makes up for it in this case.  Nice call man (especially on the exit)!

FWIW I find Goodvibe's blog to be one of the better ones on CAPS, while you may disagree with his read on the market Goodibe has a clear well diagrammed TA rationale which is great espcially fo those who wish to learn the art.

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#15) On January 28, 2009 at 10:24 PM, anchak (99.84) wrote:

SB is a good bet: Abit said it best in his pitch : Yeah SAFE ...LOL!

High debt load and high unsustainable dividend. Most Grecian stuff is toxic from this perspective.

GNK, EGLE,NM are up there too.

Incidentally, anyone ever wonder why Bank Of Greece keeps taking hits  -I am going to look into the 10Q

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#16) On January 28, 2009 at 10:35 PM, Tastylunch (29.29) wrote:

anchak

haven't thought about i, but I would assume their accounting rules must be alx over there based off their shippers seem to operate.

I know europe in gneral is a mess, far worse right now than we are. Italy and Spain are in very bad shape.

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#17) On January 28, 2009 at 10:36 PM, Tastylunch (29.29) wrote:

ugh typo city

that should ahve read

"haven't thought about it, but I would assume their accounting rules must be lax over there based off the way their shippers seem to operate."

 

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#18) On January 29, 2009 at 2:36 AM, Tastylunch (29.29) wrote:

Followup before I finally get some sleep DRYS filed to sell 500 million worth of shares. Good luck with that desperate play guys

http://www.streetinsider.com/Special+Reports/DryShips+(DRYS)+filed+to+offer+up+to+$500+million+in+common+shares/4338403.html

My guess is the market will see it for what it is and smack the stock down Saytam style.That's crazy dilutive at best

also there is a rather tragic article on seekingalpha.com

 http://seekingalpha.com/article/116673-dryships-looks-good-even-without-its-dividends

While she certainly screwed up, the poor woman is just getting evicerated.

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#19) On January 29, 2009 at 11:39 AM, Mary953 (76.13) wrote:

2317 - 424

Thanks, Tasty.  There are 2317 outperform picks on Dryships at the moment and 424 underperforms.  Without your analysis, there would be at least one less underperform and, given the delightful idea of all those DHT ships just parked full of oil at those high daily lease rates, I would have most certainly have gone looking for more tankers to add to my list of green thumbs.

Ahh -  By the way  ---     how do you move a video from youtube to this site without all of the ah- extra links that might be attached?  I really didn't mean for those to be part of the link that I provided. 

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#20) On January 29, 2009 at 12:46 PM, SideShowMel0329 (45.83) wrote:

Well I guess I'll throw this out there: I own DRYS. I bought in at $22 when the BDI had dropped over 90%.

Not my best decision, I know, but even after this news, I still cannot bring myself to sell the shares. With a P/B of .25x, I feel like they still have a solid foundation of assets and they're still predicted to earn money in Q4.

In fact, I wouldn't be surprised if they actually beat out Diana in EPS for Q4. I'm not saying DRYS is financially sound, but I'm just going to sit on these shares until the storm is over and DRYS is trading at normal levels.

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#21) On January 29, 2009 at 1:06 PM, Tastylunch (29.29) wrote:

Mary953

Mary I don't you think you cna or at least I don't know how to.  Those links are embedded in the acual video itself so I think it's just kinda stuck that way.

I suppose the only real alternative is to use another video srvice like Vimeo or Hulu as they ahve the video you want.

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#22) On January 29, 2009 at 1:17 PM, Tastylunch (29.29) wrote:

SideShowMel0329

I disagree obviously

Wher you and I differ is that I do not trust any of management's numbers or tactics.

consider some of this

They have sold over 27 million shares since October!

They are going to sell $500 million

Thats heavily dilutive to values like Price to Book. It isn't as cheap as it looks.

Their CEO also owns Cardiff Marine which they have odd often one sided business dealings with.

They only have 2 employees

Their CEO has a blatant contempt for shareholders

They have over  5 times more debt than equity

They are in breach of said debt and have cancelled all their new ship purchases.

The BDI dropped 94% which suggests that the analyst estimates are likely going to be waaaaay off. it's hard to seehow they are going to beprofitbale in this environment

The latest numbers I'vev seen suggest they will post a huge loss in Q4, but I should not I haven't self verified them yet.

Dry bulk shipping is heavily cyclical, with huge booms and huge busts. This happens every cycle that some shipper gets very badly over extended and usually goes bust entirely.

I'm not telling you should necessarily sell as who knows where DRYs goes in the interim between here and zero and that's your own personal decision.But I do think you should at least view the DRYS financials with a ton of skepticism. Normal levels for DRYS might be zero not 22+. TMF Eldrehad was hating on them the first time they were in the teens. Clearly he thinks they were overvalued then. Management is not trustworthy in DRYS imo and that means the numbers aren't either.

Just my two cents.

I have no money on this so I hope it works out for you.

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#23) On January 29, 2009 at 6:44 PM, Predaking (29.53) wrote:

Jim Cramers buy call at $15 screamed SELL!

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#24) On January 29, 2009 at 7:21 PM, Tastylunch (29.29) wrote:

Predaking

Hah! figures. Cramer trys to do too much, frankly he makes opinions on too little information too often.

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#25) On January 29, 2009 at 7:50 PM, Tastylunch (29.29) wrote:

Dryships cancelled another ship order

http://www.streetinsider.com/Corporate+News/DryShips+(DRYS)+Cancels+Acquisition+Of+Another+Drybulk+Carrier/4342602.html

will it be enough? I doubt it but it definitely helps.

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#26) On January 29, 2009 at 8:21 PM, SideShowMel0329 (45.83) wrote:

I just don't understand why anyone would sell now RIGHT after the bad news was released. Having a shipping company with debt issues is a lot different than having a bank with debt issues.

Dryships will always have the oppurtunity to continue their business, and hopefully hold out until shipping picks up again (and it will, China will not stay dormant forever). Banks, however, are seeing their entire system collapse around them and need to find new ways to raise capital.

DRYS got itself in bad debt problems, and GE has made some idiotic moves as CEO. I regret my buy but I don't see myself selling this as a loss.

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#27) On January 29, 2009 at 10:05 PM, Tastylunch (29.29) wrote:

SideShowMel0329

I just don't understand why anyone would sell now RIGHT after the bad news was released.

You would if you believe the company's equity will not survive (or is worthless).

I personally don't think it will survive, I figure bankruptcy is the most probable scenario and liquidation is also may be on the table.

Also precisely because the bank sector is in trouble and dryships owes money to banks, they will not play as nice with Dryships as they may have normally in a normal recession. The banks need the money too badly. I've seen it happen several times in the real world lately including some business friends of mine. Loans that normally get renegotiated are not. the banks just come in and take the collateral.

There's little to no private equity buyout opportunities available to them either due to the trouble in the financing world . PE firms have had it rough too. And DRYS is large enough they would need a very very large infusion.

The drop in share price raises the dilution risk to dangerous levels and suggests they will have a lot of trouble getting buyers for those shares they just offered.

Then you throw in the blatant corruption at the Executive level and you have situation where no one I can think of would want equity.

DRYS as I see it has no avenues to save itself save improvement in the underlying bsuiness to escape this. I don't see that stabilizing for at least 6-9 months which is longer than I think they can survive in their current state.

just my two cents. Like I said I have no money on the line so I hope you get a sort conering bounce so you can get out of your position.

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#28) On January 29, 2009 at 10:20 PM, Tastylunch (29.29) wrote:

FWIW if this was a normal environment and DRYS had trustworthy management I'd probably agree with you.

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#29) On January 29, 2009 at 10:44 PM, herztical (28.07) wrote:

F DRYS...I am so happy I own puts on this f'n stock!  This is by far the worst run and corrupt company. I wrote about DRYS on Jan 22 and if you Google "DRYS" you'll see my post

http://caps.fool.com/blogs/viewpost.aspx?bpid=133944&t=02009005112621729295

I would love for this thing to tic higher so I can short the hell out of it

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#30) On January 29, 2009 at 11:18 PM, Tastylunch (29.29) wrote:

herztical

yeah short interest is way up, borrows hard to get now. Might actually be not a bad daytrade long if you get a short covering rally.

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#31) On January 30, 2009 at 12:09 AM, herztical (28.07) wrote:

great post btw ...no way I'm getting caught long again.  I'll stick w/ my rm puts.

...and I gotta get my score up to at least look respectable!

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#32) On January 30, 2009 at 2:39 AM, tonylogan1 (28.15) wrote:

Nice post.

I grow more convinced each day that the world is just a big ponzi scheme, and you just need to pick what position in the pyramid you want to be on.

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#33) On January 30, 2009 at 11:54 AM, SideShowMel0329 (45.83) wrote:

Tastylunch

I agree with you that these are not normal circumstances regarding the banks. Not to mention the Greek economy is under fire right now.

I wouldn't be surprised if GE could pull some strings with equally crooked bank loaners to keep his company afloat for a bit longer.

But there's a difference between a company with bad debt that's losing money (like GM or various construction companies) and a company that's in bad debt, but even in the recession, is still gaining money (like DRYS).

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#34) On January 30, 2009 at 8:24 PM, Tastylunch (29.29) wrote:

SideShowMel0329

I guess we are just going to have agree to disagree.

GE's rep is well known by now and that makes the banks less likely to play nice with him. They don't want to get robbed and they can see he is bleeding the company dry. They would rather they bleed GE dry than the other way around.

I also take contenton that DRYS is making money ,  they justwarned that 4th quarter earnings would be well below expectations? Analysts routiniely overeestimate earnings in recessions.

They only have around 400 million in current assets, they can't service their debt that's due (around 1+ billion), the stock has dropped so much that they will have basically double the available float with their 500 million offering which they ay not even get raised and I'd have to assume their cash flow has gone badly negative.

for perspective

http://community.investopedia.com/news/IA/2009/Time-To-Man-The-Lifeboats-On-Dryships-DRYS-GNK-EGLE0130.aspx?partner=YahooSA

The  cliffnotes is the last time this happened 17 out 18  greek shippers defaulted. The bankers are accutely aware of this, they won't give Dryships much rope.

I don't see how common equity survives.but I think it's troubles are so well known that we may see a massive short covering rally at some point before it goes down for the last time.

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#35) On January 30, 2009 at 10:08 PM, TheGarcipian (42.84) wrote:

Tasty, excellent follow-thru on the comments, man! I was already familiar with most of the blogs/reports you tagged in the main blog, but your Comments (specifically those conversations with SideShowMel0329) were enough to convince me to sell. Yes, it is painful to admit that I am one of those lowly (stupid!) shareholders of DryShitz Inc(ompetents), but I am. I'd bought it only as a short-term trade (much like GoodVibe4Ever did, but with the opposite results). Unfortunately, with my job, I can't always check these prices and DRYS moved downward too fast for me. I was also hoping against hope that this flotsam would turn around. Should have seen the 4x rise recently and bailed, but I missed it. Man, I've gotta win the lottery so I don't have to work anymore! Then I can enjoy my time losing money in the market... Fortunately, it's not a very big position. I'll just use the loss for 2009 taxes :-)

But thanks for the give-and-go with  SideShowMel0329. I had the exact same reservations, and you rationally argued me back into seeing it's time to let go. Excellent well-thought-out & well-written comments. They're very much appreciated. Keep up the great contributions to CAPS and have an excellent weekend!

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#36) On January 31, 2009 at 3:21 PM, Tastylunch (29.29) wrote:

TheGarcipian

Sorry you got stuck man, it's happened to me a couple time before too. :-(

yeah the hard part is to sell on the way down, logically your mind understands reversion to the mean to some degree and figures it ought to bounce back at least temporarily to get some of your money back. Unfortunately that's usually not what happens  (and if it does bounce it may be pathetic enough to not matter). I've owned two stocks that have gone to zero in my life and I watched them down the whole way.

Sometimes a loser is a loser and this stock in this market with these credit condittions.... well it just doens't look good. I'm glad you found use  in the discussion although I wish it was one that could make you money instead. :-)

Yeah with a dayjob myself, I find it imperative to keep stop loss orders in place. I've learned the hard way to be successful at trading you have to cut losses quick especially if you are in a stock you know is garbage. You can have the right idea but can still get screwed by the unknowable.

I usually set around 7-10% stop losses on swing/position trades and if I actually have time to daytrade I'll never let it go more than 2.5-3% against me. It's pyschologically painful to take forced losses but I find it keeps them from destroying my wins.

Well sorry it happened to you man, Drys was a great stock to trade so it was a good idea. I'm sure you'll nail the next one.

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#37) On January 31, 2009 at 4:37 PM, Mary953 (76.13) wrote:

You are just giving me more and more reasons to love investopedia!  I have a whole handful of terms and stocks to check on that thing.  [Totally, totally off topic for the entire site, MedLinePlus is the medical equivalent of investopedia if you ever need it.  Don't bother with webmd.  I am NIH-certified for reference from another job]  

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#38) On February 01, 2009 at 1:02 AM, GNUBEE (24.85) wrote:

Thanks Tasty

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#39) On February 05, 2009 at 9:38 PM, TheGarcipian (42.84) wrote:

Tasty, them's the breaks... Yep, in hindsight, I should have used stop-losses, but que sera sera. Generally, I use 7%-8% stop-loss except on Ultra ETFs (if I trade any, which EverydayInvestor warns is stupid, but I don't understand why; maybe you or he can enlighten me?). The Ultra ETFs just have too much volatility to put anything tighter than 10%-12%, so there's definitely more room for losing (and making) money. Or maybe I should be thinking the other way around?

Usually, I have to set a fairly loose trailing-stop on a buy position in an Ultra ETF, but as it rises, I'll tighten that stop, say from 10% down to 3%-5%. Your thoughts on this strategy?

Well, the good news is I'm totally out of DryShitz now and I've sold all my Pisser, er, Pfizer. Just got the check yesterday (it was held in a DRIP account), so it was bittersweet. It was nice to see those dollars get back into my account today, even though I lost money on PFE on every single dividend reinvestment over these past sucky 8 years. And here I thought you were supposed to see BLUE when you take a Viagra overload; all I'm seeing is RED.

But I'm staying in this crazy race, even though I'm bruised and battered... Where do you think the market is going next week: up, down, or sideways?

Thanks,
--Gar

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#40) On February 05, 2009 at 10:45 PM, Tastylunch (29.29) wrote:

TheGarcipian

Everyday is very methodical so he tends to les willing to speculate freely than most traders. But he has a decent point about the doubles. Anchak has a excellent post about 'em. Basically they are doomed to go to zero due to the fact the rebalance everyday (they only double the daily moves not cumulative). So Caveat Emptor on that one.

But yeah I do think you can swing trade them profitably, but that it's a lot harder I think than it seems.GoodVibe4ever seems to do this for a living. he might be a good player to ask.

I feel you on Pfizer,  my dad has stock in them. I can't believe how bad of a job they have done just when they should be killing it with an aging populace.

Next week I dunno, You have that floor rumor going around today that Mark to Market will be suspended so the banks could dump again if they don;t get what they want.

back in Jan I thought we'd be in full blown snapback rally mode right now through March but that hasn't happened.

I think Oil still is being pulled lower, OPEC's cuts are starting to fail as members are cheating. But I think the next hard pulse down is probably could be "the" bottom for Oil. But it might be a while before it snaps back if we really have deflation.

The Financial Ninja think we are badly overbought and thinks we will dump. (he's a pro tarder from Canada, has a blog at financialninja.blogspot.com or something like that)

So i dunno the market  to me seems very tightly strung and could either way. My guess is the Ninja is right, the guys' calls are freakishly good.

It's harder to predict now that the gov't is messing with the market daily. I miss December it was a lot easier when the Whitehouse wasn't as involved in the daily gyrations. Holding stocks over the weekend is scary experience anymore.

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