Something to love about a company that top CAPS players HATE!
After finishing a big project this morning, I decided to take a break and procrastinate by reading my weekly issue of RigZone.com's newsletter (I know, I'm lame). In doing so, a headline leaped off of the page at me. I thought to myself, wow what a cool blog post! One that says something positive about one of the most hated, and painful for many, stocks in the CAPS universe, DryShips (DRYS) (see article: DryShips toTake Over Ocean Rig). This company has been the bane of many Top Fools' existences, including awesome stock pickers like TMFEldrehad who has ridden it to a 911 point loss so far and TMFOtter who is down over a whopping 946 points on it.
The gist of the article is that Dryships is diversifying its business by purchasing a relatively small Norwegian company that owns and operates deepwater drilling rigs. Anyone who has read my blog knows that I am extremely bullish on this sector (see article: Transocean: The deeper they drill, the higher their stock will go). I currently own several companies that are involved in deepwater drilling in real life, including Transocean (RIG), Diamond Offshore (DO), and Pride International (PDE). The large number of deepwater discoveries in the Gulf of Mexico and off of the coast of Brazil alone are enough to keep every single deepwater rig that currently exists and every single one that will be built busy for years. Ocean Rig currently owns and operates two deepwater rigs and it has another two on order.
If you hate Dryships, this small acquisition probably is not enough to change your mind about it. Good news, you might not have to. Along with its recently quarterly results, DRYS stated that it intends to spin-off its new drilling business segment to shareholders and list it on a major exchange in the United States within the next 12 months. It remains to be seen how well Dryships will manage this new business segment...clearly many people dislike its current management. However, I often say that a rising tide lifts all ships, possibly even Dryships in this case. If the valuation is attractive, I might consider picking up some shares of the spin-off in real life after doing some additional research. This is definitely a situation that I plan on am keeping an eye on.
An actual photo of an Ocean Rig drilling rig.
No position in DRYS