Diana Containerships Inc. (NASDAQ:DCIX)

CAPS Rating: 4 out of 5

Recs

5
Player Avatar Teacherman1 (56.09) Submitted: 6/20/2011 11:46:01 AM : Outperform Start Price: $6.48 DCIX Score: -13.67

Closed and re-opened to more accurately reflect my actual start price.

The containership company was initiated a buy at both Jefferies and Cantor Fitzgerald with a $10 price target. (This is from CNBC) .

Will repost my pitches from last week as replys.

I strongly agree with both Jefferies and Cantor Fitzgerald.

JMO and worth exactly what I am charging for it.

Report this Post 26 Replies
Member Avatar Teacherman1 (56.09) Submitted: 6/20/2011 11:47:49 AM
Recs: 0

Pitch from 6-13.2011.

Actually in at $7.11.

Will add more information in a follow up pitch, but my reason for buying is that they are offering 17M shares (14.3 to public, 2.7 to DSX ) at $7.50 per share. Will raise about $125M to pay off financing debt, pay for more ships, and for G&A. Since the current price is lower than the new offering, there will be little to no dilutive effect on current shareholders.

Their new balance sheet should look great. I will look to see what I can find about their current balance sheet and do a proforma.

This looks like a winner to me.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 6/20/2011 11:55:54 AM
Recs: 0

Pitch from 6-14-2011.

Don't want to hype it, but this is a buying opportunity that doesn't come along that often. At least not since the "crash".

Forget where they were before. This was a spinoff and the price at that time was not really meaningful.

Some people are passing because it appears to have dropped a lot and because of the "massive" ( relatively speaking), new share offering. Since the new shares are priced above this level, that is a good thing, not a bad thing.

They will have an awsome balance sheet to grow from.

Remember, this is Diana Shipping (for all practical purposes), one of the most conservatively run shipping companies around.

I see a realistic 200% upside over time.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 6/20/2011 12:07:21 PM
Recs: 0

2nd Pitch from 6-14-2011.

I want to clarify something in my previous posts, where I said the new offering would have little to no dilution for current share holders. I was refering to recent shareholders who just bought since the announcement, and those who might buy at this price.

Obviously the announcent had significant dillution for those who were holding at the time of the announcement.

I was previously a holder when I got shares from DSX and bought a few more. When it went up, I sold at a profit and have not paid a lot of attention to them until recently.

My point was that this is a very good entry point for those who buy now.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 6/20/2011 12:11:05 PM
Recs: 0

Pitch from 6-17-2011.

Currently in at $6.96. Will probably hold off buying for a while until a clearer picture emerges on them.

If there is an unexpectedly sharp drop, or I can see where they are likely to be in the next few quarters, I will likely buy more.

I am still very bullish on them for the longer term, but information is kind of hard to come by right now on what is happening with the new issue.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 7/1/2011 2:07:57 PM
Recs: 0

Since Yahoo hasn't gotten around to updating their information on DCIX yet, here is a link to their web site.

http://www.dcontainerships.com/

This will let you see where they were at year end, and at the end of the first quarter, before the new offering.

This is kind of rocking in the cradle right now, but when the picture becomes clearer, and the people who got holding at $12 when they did the new offering get over their feeling of betrayel (if they are smart, and didn't hold many shares, they could make it up quickly), this will go up significantly.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 7/2/2011 4:56:53 PM
Recs: 0

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.

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.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 7/9/2011 5:39:45 PM
Recs: 0

A rough proforma based on information from their site, shows that upon the issuance of the new shares as of about 3 weeks ago, their balance sheet should show:

Approx $43M in cash.
No debt
5 ships with a value of approx $161M

With the new shares issued, the total is now just over 23M

This equates to a current book value of just under $9 per share.

The ships were two new builds, and 3 used (which were just bought so should be realistic current value).

All 5 ships are under charter for around $21,000 per day for about 24 months, and should generate gross revenue of approx $36M per year.

They have stated that they plan to pay a variable dividend equal to 70% of available ( after expense cash ), based on the previous quarter, payable beginning August, then in Nov, Feb, and May.

The first dividend will reflect only the operation of the 2 new builds. The Nov dividend will reflect the operation of the 2 new builds and the 3 used.

The dividend will vary but should be about $0.50 per share, annualized, or about 7% based on the current price of approx $7 per share, at current charter rates, with the 5 ships.

If they add additional ships, this will of course change.

There will likely be price appreciation for the shares, once they have their August conference call and provide the Q2 financials.

Remember, this is a rough estimate and reflects only my own understanding and expectations. If you are planning to buy, do your own DD.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 7/11/2011 9:59:50 AM
Recs: 0

Adjusting dividend into a range after finding further information. Remember, this is a variable dividend so could go up or down based on what they are doing at the time. The most significant factor that will affect it is when they add more ships. They have stated that when they add ships, whether through using existing cash, issuing more shares, or borrowing, they will treat them as if they were financed. Since this would add to expenses, that would likely reduce the available cash. Of course, they will be adding more revenue at the same time.

The long and short of this is that based on the recent price of the shares, the annualized dividend could range from 3% to 7%.

In calculating this dividend, I used "available cash" at a range from 30% of revenue to 45% of revenue.

I believe the 45% is more realistice, so I expect the dividend to be closer to the upper end, at least for awhile.

If you add in the expected appreciation for the share prices, which at book value would be about $9.00, you would get a very good return.

Remember, this is working with numbers that have not been officially released, so take that into consideration.

This is, as always, JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 7/14/2011 2:57:27 PM
Recs: 0

Thank you. I will take some more.

Member Avatar Teacherman1 (56.09) Submitted: 8/2/2011 4:30:58 PM
Recs: 0

It will be interesting to see what they actually report tomorrow morning before the market opens.

The "day traders" have been playing with each other for the past 2 or 3 weeks as evidenced by the "wild swings" for no identifiable reason.

The daily volume (which includes multiple buys and sells of the same shares) has amounted to less than 1% of the outstanding shares.

I have a feeling that will soon go away.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 8/6/2011 10:19:02 AM
Recs: 0

Blog written on 8-4-11.

I bought more because this "panic" just made them too attractive to pass up.

http://caps.fool.com/Blogs/they-are-giving-it-away-time/623022

Do your own DD, but this one is just too good to let get away.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 9/10/2011 11:07:55 AM
Recs: 0

Have you noticed that the volume has dropped way off? It looks like the day traders have finally stopped playing "tag" with each other.

Not much information in the past few weeks, since the Q2 report.

When the Q3 information is made available, this should be the catalyst to get this stock moving.

For some reason, Yahoo doesn't have any quarterly, or "key" information on them.

As of the end of Q2, they had assests of $209M and equity of $206M. $43M of their assets were cash.

If you are holding, just be patient. If you are not holding, you might want to consided doing so.

You can get information from their web site, since Yahoo hasn't seen fit to put it out.

A good buy, especially at this price.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 10/2/2011 11:59:59 AM
Recs: 0

The writer of the Seeking Alpha about TEU, who was not impressed with DCIX, seems to have changed his mind.

Here is a link to his "upgraded" article.

http://us.rd.yahoo.com/finance/external/pssa/SIG=13lgq20a3/*http%3A//seekingalpha.com/article/297066-diana-containerships-strong-balance-sheet-makes-this-a-dividend-value-play?source=yahoo

Member Avatar Teacherman1 (56.09) Submitted: 10/14/2011 2:38:52 PM
Recs: 0

Bought more. Now in at $6.05.

Member Avatar NeuroNerd (< 20) Submitted: 10/23/2011 2:37:31 PM
Recs: 0

Thinking about buying some DCIX this week before they announce Q3 earnings. With their listing in the Marshall Islands, do you know whether foreign taxes will be withheld on dividends and capital gains by my broker or not? I ask because I'm trying to figure out whether I can get the best bang for my buck by purchasing it in my Roth IRA or my regular brokerage account. Any info you could offer would be appreciated.

Member Avatar Teacherman1 (56.09) Submitted: 10/24/2011 2:39:09 PM
Recs: 0

I don't think foreign taxes will be withheld. A lot of the shipping companies are incorporated in the Marshall Islands, and I have never had foreign taxes withheld.

Some foreign banks, such as STD give ADR holders the option to have taxes withheld, if they are taking the dividends as cash, but if reinvested, no foreign tax is withheld.

As to whether or not the dividends on DCIX would be treated as dividends or capital gains, it depends on whether they are classified as a "passive" or an "active" investment. Normally, shipping companies are treated as "active", but they could be treated as "passive" if they are viewed as simply renting the vessels.

If you go to their web site and look at the SEC filings, the Q2 one, they talk about this.

If you are concerned about it, you might ask your broker, or check with a CPA. I am not qualified to advise you on that.

Personally, I would not put them in a Roth, because I view this as a 2 to 3 year hold, after which anything could happen because of the changing conditions in the shipping markets.

I am looking for some good dividends, and share appreciation, after which I would likely start to sell some. It's not like one of the large CAPS that has been around forever, and will not change much over the next 20 or 30 years.

Good luck with whatever you decide to do.

Member Avatar Teacherman1 (56.09) Submitted: 11/23/2011 11:11:15 PM
Recs: 0

I am posting a link here to a recent blog because it seems to have disappeared along with several others. I guess there is a glitch in the system.

http://caps.fool.com/Blogs/dcix-finally-the-veil-has/671787?source=itxsitmot0000001&lidx=2

I did want to include a correction I posted to this blog concerning the equity to debt ratio.

I said the equity was 50 to 1, when it is actually 100 to 1.

Member Avatar Teacherman1 (56.09) Submitted: 11/28/2011 7:45:09 PM
Recs: 0

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.

Member Avatar Teacherman1 (56.09) Submitted: 12/1/2011 10:20:39 AM
Recs: 0

They finally put the correct dividend information on Yahoo Financial.

They still haven't managed to put updated information for either Q2 or Q3 in the income and balance sheet sections.

They showed a yield of 12%+ this morning.

Member Avatar Teacherman1 (56.09) Submitted: 12/9/2011 2:23:49 PM
Recs: 0

I believe they just bought, or are in the process of buying 2 more vessels. Don't have details, but maybe this will "shake it loose".

Will post more information when I find it.

Member Avatar Teacherman1 (56.09) Submitted: 12/19/2011 10:11:29 AM
Recs: 0

Update on DCIX.

Link to GlobeNewswire on Yahoo.

http://finance.yahoo.com/news/Diana-Containerships-Inc-pz-1731979176.html?x=0

They bought two more vessels for $33M each and both come with 36 month charters in the $22,000 - $23,000 range.

They are to take delivery in Jan or Feb.

They also announced a $100M credit facility, which may be increased to $150M.

Hopefully this is what everyone has been waiting for.

No details yet on exactly how this will all be structured and how it will affect earnings, cashflow and dividend, but will be positive.

You may want to move off the sidelines and get in for real before it starts to move.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 1/10/2012 10:01:10 AM
Recs: 0

another update on DCIX

They bought two more vessels, with charters in place.

The purchase price was $30M each and will come with two year charters at $24,750 per day; which should generate additional revenue of $33.5M over the two years, or $16.75M per year.

Once again, there are no details on how the purchase was structured ( cash/debt ), but expect they will give us the details with their annual report.

This brings to 9, the number of vessels they now own.

They are expected to be delivered during the first quarter.

Their shares "shot up" this morning, but in the absence of any details, it may not hold.

In any event, this is positive news.

Still not to late to "jump aboard" for the ride up.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 1/10/2012 10:10:34 AM
Recs: 0

Here is the link to Globwire on Yahoo.

http://finance.yahoo.com/news/Diana-Containerships-Inc-pz-2271277433.html?x=0

Member Avatar Teacherman1 (56.09) Submitted: 2/23/2012 10:19:59 AM
Recs: 0

This statement by the CEO is very important in understanding why (in the short run), DCIX appears to not be doing as well as it appeared they would.

"The growth in time charter revenues during the fourth quarter was accompanied by an increase in operating expenses, mainly due to the extensive maintenance costs brought forward for the newly acquired Maersk vessels. Soon all our vessels will have been upgraded to our Company’s technical standards and operating expenses will in effect stabilize."

They still had good cash flow, when you add back the depreciation expense, and are still going to pay the $0.15 quarterly dividend.

So much happened since the first of the year, that the situation as reflected for the Q4 and year end report is no longer reflective of their current condition.

It will be interesting to see what they have to say in their CC, and even more interesting to see where they are by mid-year.

This (seemingly) bad news regarding earnings, presents an opportunity to accquire a position at a discount from what otherwise would be available.

I am still long and strong on them as an intermediate term investment, and still look for good share appreciation and a good dividend over the next 18 to 24 months.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 2/29/2012 5:52:55 PM
Recs: 0

Yahoo Financial finally got the year end financials posted for DCIX. Here is a link to the balance sheet, and it will only get better.

http://finance.yahoo.com/q/bs?s=DCIX+Balance+Sheet&annual

At today's price, they are trading for about .75% of book value, and paying a dividend with a 9% yield.

This may or may not be a long term hold, but it is a great intermediate term (18-24 month) buy.

They still have a potential 30% to 40% share price appreciation to go along with that dividend.

JMO and worth exactly what I am charging for it.

Member Avatar Teacherman1 (56.09) Submitted: 3/8/2012 1:02:09 PM
Recs: 0

Didn't sell, just wanted to take advantage of this "short term trader" drop, to more accurately reflect my actual start price.

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