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Teacherman1 (47.61)

The Flea Wagging the Dog - DCIX

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March 15, 2012 – Comments (5) | RELATED TICKERS: DCIX

It is interesting to see that right now, less than one quarter of one percent of the outstanding shares have actually driven DCIX back down to an attractive buying price.

I will admit that they are hard to understand right now, with the addition of new vessels, and draw down of an RBS line of credit ot over $90M, but they still have what is probably the strongest balance sheet in the shipping industry.

Now that they have posted an SEC filing showing a potential $250M offering, either as new common shares, prefered shares, warrants, etc, without really providing a lot of information on what they are planning to do with it, it gets even more confusing.

I was going to wait until I got more information and could lay it out a little clearer before posting a new blog, but I thought a timely "heads up" on a new buying (or adding) price might be of some interest to investors.

At the most recent price, their current $0.60 annualized dividend is yielding just under 10%, and they did declare they were going to continue to pay that out at a 70% of available cash rate.

They also indicated in the notes to their filing, that their plans going forward were to continue to add additional ships to their fleet (at profitable rates), so as to increase value to share holders via their dividends.

Remember, that the draw down on their credit line was to add vessels to increase earnings, cash flow and dividends.

It's not that they used the funds to "throw themselves a party", but to buy more profitable assets.

I still see this as a good intermediate term investment (at least for the next 18-24 months), and probably much longer, with a current dividend yield of about 10% and a potential share price appreciation in the 30% to 50% range.

JMO and worth exactly what I am charging for it.

5 Comments – Post Your Own

#1) On March 15, 2012 at 3:18 PM, Tagit (46.52) wrote:

Hello Teacherman 

I think the entire shipping sector is set to rebound and I’ve been lurking and waiting very patiently. However, the world economic issues since 2008 have weighed heavy on many shippers and loaded them down with debt. Taking on new ships with no rate increase (even) if contracted is still dead money. You still have to cover operating expense and repay loans. These ships are not cheap and there’s probably a surplus of ships too.  

The global recovery is inevitable and an increase in the BDI will happen. I just don’t want to get caught up looking in the rearview mirror at days of old. The shippers will stay depressed for some time IMO, but like I said….I’m waiting, lurking and searching for that one undervalued gem that will weather the perfect storm. In fact, I have (I think) 7 shippers on my personal watch list.  

Maybe some of these folks will wake up and realize that a glut of ships is keeping prices depressed. I understand you have to keep your fleet updated, but c’mon. 

Have a good week and fool on!!

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#2) On March 15, 2012 at 4:20 PM, Teacherman1 (47.61) wrote:

Hi Tagit

Was happy to see a blog where you and Lemoneater both posted about positive events. Will continue to keep both in my daily prayers.

I agree with you that most shipping companies are now nothing but "spec plays", but DCIX, DSX and NM are, at least at the right price, good longer term plays.

I am waiting for a real "schitzo" market to buy DSX again. They are solid right now, but I do like "low, lower and lowest " prices.:)

NM has a lot a interconnected parts and can be hard to get a handle on, but the main thing they have going for them is their CEO, she is "world class" at creative financing, and making all of the parts fit together.

If EXM took a "really, really, big drop", I personally would buy a small position as a "reasonable spec play", but sell it on the rebound.

EGLE, I wouldn't touch, but even they might surprise.

If TEU drops down far enough, I would buy some, but not as much as I had before. They should be ok for a year or so, but the dividend is going down and they are paying out at too high a rate based on their available cash.

Looks like you are up a lot today. Hope it continues.

Good luck and have a great week.

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#3) On March 15, 2012 at 10:23 PM, HarryCaraysGhost (99.70) wrote:

Hi Teacherman,

Bummer that I bailed on DCIX before it hit my target price of $7.

Oh well I still have 25 shares.(cost basis to low to print,..and I would have to look it up...:)

(and yes you are fully entitled to say Bhawck,bhawck,bhawck..Chicken...:)

Heres one that you may be interested in- GLBS.

I had asked TMF to add it earlier this week.Only green thumb.

Cheers. 

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#4) On March 16, 2012 at 12:47 AM, awallejr (79.57) wrote:

LOL Harry you are the only person that even touched GLBS.  You are the market heheh.  I sincerely hope you make money.

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#5) On March 16, 2012 at 11:27 AM, Teacherman1 (47.61) wrote:

Hey Harry

You are the score leader on GLBS, and they can't take that charm away from you.

First time I ever saw a score leader with a negative.:)

I have never heard of them, but will take a look.

I would never call anyone chicken for bailing out (partially or fully) of any stock.

We all have to do what we feel comfortable with.

Good luck and have a great day.

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