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The Company owns and operates fleets. The company's fleet carries various drybulk commodities, including coal, iron ore, and grains, bauxite, phosphate, fertilizers and steel products.
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ctmedic00 (99.98) Submitted: 1/23/07 11:31 AM : Start Price: $17.50 DRYS Score: -39.99
This stock is a scary rip off. Here's some information on what's going on behind the scenes...speaking about his epic 194 page prospectus Kathryn Welling gets into detail...The candid if legalistic disclosures in the document run the gamut from the mildly spicy (both Mr. Economou’s wife, and his ex-wife, through separate Liberian corporations, called (respectively) Advice Investments and Magic Management, are listed with him as principal shareholders in Dryships), to the familial: Among the first vessels Dryships planned to buy with the offering proceed were six owned by companies controlled by Economou’s sister. Likewise, both Cardiff Marine, the affiliated Liberian-registered shipping management company that will actually handle Dryships’ operations, and Drybulk, S.A., its Liberian-registered broker for charters and ship trading, are strictly family affairs. Economou owns 70% of each through something called the Entrepreneurial Spirit Foundation, a Liechtenstein entity he controls. (This same foundation acquired 70% of Dryships, pre-offering, in exchange for transferring effective ownership of its initial six-ship fleet to the IPO company). Meanwhile, the other 30% of both Cardiff and Drybulk are held by his sister’s Prestige Finance S.A., yet another Liberian entity.The prospectus for Dryships (a company Economou formed, perhaps for variety’s sake, in the Marshall Islands) is rife, in other words, with convoluted related party transactions. Not that it isn’t up-front about them. Take the fact that Dryships has only two employees, its CEO and a CFO, and so will conduct virtually all of its operations through Cardiff, which Economou created back in 1991. It’s right there, under risk factors, on page 12. And all that a prospective shareholder had to do was flip to the top of the next page to learn, “you will have no recourse against Cardiff.” A little farther down that same page, furthermore, some fairly standard boilerplate verbiage about Economou’s stakes in both Cardiff and Dryships creating potential conflicts of interest is capped with an unusually blunt warning that blood is thicker than water: “Cardiff may give preferential treatment to vessels that are beneficially owned by related parties because Mr. Economou and members of his family may receive greater economic benefits.” Link to full story: http://www.weedenco.com/welling/archive/sb/v07i04sblogo.aspI personally love the last statement because it simply states it like it is. I will be giving my family preferential treatment because I get more money if I do. Seriously anyone who is long this stock better get short real quick. If you have any doubt as to what happened with the CEO's last venture just so a little bit of research on Alpha Shipping Plc. This is certainly going to be good for a hammer charm for anyone who stays here long enough. The fall will likely be sharp sudden and without warning.
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chk999 (99.99) Submitted: 2/14/07 4:07 PM
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Great write up. I really really want a hammer charm and this seems like a good wayto get it. Plus the 90 points won't hurt either.
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rbcaps (< 20) Submitted: 5/09/07 3:55 PM
The estimated and actual earnings for this stock keep rising, so the stock price increases. The number of thumbs down on this stock is exactly why this web site is called fool.com. As far as I can tell, people are rating it down soley based on rumors.
HonestK (95.41) Submitted: 6/18/07 3:15 PM
rbcaps says "As far as I can tell, people are rating it down soley based on rumors."Absolutely buy and sell on rumors. Or at least base decisions on educated guesses and a little gut feeling. When facts become official, the news is already priced into the stock price. That's the tyranny of the Efficient Market Theory. If one only waits for stories to break on the Wall Street Journal, they might just be better off to invest in an index fund.As far as the increase in stock price and earnings figures, I say its too early to judge. These things take years to play out.
zygnoda (73.01) Submitted: 7/12/07 1:25 PM
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If you did a little reading you would find all this on their site.Yahoo finance confirms 2 employees. http://www.irwebpage.com/dryships/files/DRYSHIPS_2005_ANNUAL.pdf"Cardiff is a privately held company and there is little or no publicly available information about it.The ability of Cardiff to continue providing services for our benefit will depend in part on its ownfinancial strength. Circumstances beyond our control could impair Cardiff's financial strength, and because it is privately held it is unlikely that information about its financial strength would become public unless Cardiff began to default on its obligations. As a result, an investor in our shares might have little advance warning of problems affecting Cardiff, even though these problems could have a material adverse effect on us.11Our Chairman and Chief Executive Officer has affiliations with Cardiff which could create conflictsof interest. Our majority shareholder is controlled by Mr. George Economou who controls a company that owns 35.5% of us and a foundation that owns 70% of Cardiff. Mr. Economou is also our Chairman and Chief Executive Officer, and a director of our company. These responsibilities and relationships could createconflicts of interest between us, on the one hand, and Cardiff, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus drybulk carriers managed by other companies affiliated with Cardiff and Mr. Economou. In particular, Cardiff may give preferential treatment to vessels that are beneficially owned by related parties because Mr. Economouand members of his family may receive greater economic benefits."At least they are being honest. haa
moalps (51.80) Submitted: 7/12/07 5:05 PM
I'm scared too and keep my underperform rating.I rather like Euroseas Ltd (ESEA) in the same business specially if you take the it by numbers.P/E DRYS 25.41 ESEA 9.25P/CF DRYS 10 ESEA 6.80Div Yield DRYS 1.46% ESEA 6.49%Ok, market cap is not the same DRYS 1.95 bio ESEA 345 Mio, but is DRYS really worth that much ?
Hallrmonky2 (82.46) Submitted: 7/17/07 5:48 PM
The Bubble must be near! Wish I could have held out a little bit longer though!
UncommonSense (< 20) Submitted: 7/19/07 7:16 PM
dude when are you gonna cut ur losses on this one and finally admit its an awesome company in one of the best sectors to be in right now? haha
ctmedic00 (99.98) Submitted: 7/20/07 9:27 AM
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What loss? A loss is only a loss when I choose to make it one. It's comments like yours that bring me back to my desk in 2001 when my co-worker said isn't Enron awesome? The the Harvard/BU guy sitting on the other side said what exactly do they do? And well the rest is Adelphia, Worldcom etc... history. I will be closing this short when DRYS sinks like Alpha Shipping Plc. The ratios on this stock remind me so much of Enron... crushing established players in the industry... but why? As I said before the fall will be sharp sudden and without warning. Hey enjoy your long for as long as it lasts just get out before this crashes.
pinti (< 20) Submitted: 7/20/07 4:06 PM
i like the post, just a shame its dead wrong. with higher demand for dry bulk they need to be shipped and its firms like these which step in and do it and prosper. other firms such as GNK,NM,QMNAR,EGLE,DSX. are also good some even have 8% yields. the best of both worlds if you ask me
ctmedic00 (99.98) Submitted: 7/20/07 4:18 PM
How is it dead wrong? I think you are confused. Facts are facts and the fact is that he has positioned himself and family to benefit and shareholder expense and told the shareholders exactly that. Of course he's going to ride this until it unwinds but when it does the shareholders will be holding the empty bag. I have this picked for a year and I'm confident that the tune will be different come Christmas. It may take years for this to unwind but be absolutely sure that it will. If you want to advise people on how great this is go ahead. I see nothing wrong with riding this up but the problem is how many people might ride it down? My largest concern at this point is why is this new company crushing it's very established competition? Superior leadership, better equipment? Somehow I doubt it. It's real easy to be bullish on a stock that has momentum but it's not my money that's getting spent here. It would be the best of both worlds but with the writing on the wall... I don't like where this ends up.
pinti (< 20) Submitted: 7/23/07 12:54 PM
but don't you think that the legal powers and the sec and procedures thats need to be put in place for a firm to go public will prevent this company from going belly up. there are lots of other firms in this space that are making money so why not this one. yes he may have been dodgy before but not necesarily now. Also the fact he is making it so his family prosper seems fair, if it is at shareholders expense then no but im not sure you can implicitly say this without being inside the company. this company is just taking advantage of global demand and doing it well. none of its ratios are out of wack with in the industry its debt to equity ratio is slighlty high but nothing alarming.i could go all day about this stock but i feel that you have ur mind made up and and are blinkered by hype and rumour
ctmedic00 (99.98) Submitted: 7/23/07 2:17 PM
I have to be honest and say no I don't think that the SEC would even begin to make sure a company doesn't go belly up as I have watched DKAM, AVFS (that's a good one), CSHD.PK ( the best short ever) all drop like rocks. Look at Bear Sterns and the CMO bailout... no one is watching. The spirit of Gordon Gecko continues to thrive. Sure there are other established companies making money but what are we not seeing. I just can't believe that this company is better than all the competition with it's well known history. You are absolutely correct with the current financials on this stock... the ratios are all great. In my opinion they are too good. This is what makes the market interesting. It's not a zero sum game. You can ride this up and it would appear that you have. I can also ride it down which I believe will happen. In summary we can both be 100% correct you today and me tomorrow. I would have changed my tune a while ago but since I wasn't really participating for a while and you can't place stops here you get what you get. Closing out now would be idiotic because I'd lose 150% of my potential return (back to me). The momentum still looks upward so you'll probably get to squeeze more out of this before it's over.The best part of CAPS is not everyone will ever agree on anything and that's the most important thing here. Instead of listening to the talking heads on TV we all get together and put out our best thoughts and see what happens. I believe I have a decent record but you don't get here by not taking chances. Time will tell but I appreciate the conversation.
pinti (< 20) Submitted: 7/24/07 2:40 PM
Good point, I guess its just different sides if the same coin. As a fairly aggressive investor firms with track records like this don't worry me, but I can appreciate your point of view.
AresFinancial (99.59) Submitted: 7/25/07 7:17 AM
Looking to short this stock...buy puts or go short?
ohkrlll (44.47) Submitted: 7/31/07 11:13 AM
"Absolutely buy and sell on rumors. Or at least base decisions on educated guesses and a little gut feeling. When facts become official, the news is already priced into the stock price. That's the tyranny of the Efficient Market Theory. If one only waits for stories to break on the Wall Street Journal, they might just be better off to invest in an index fund."Well, not necessarily, take NINE for example, its really great :) it is right now trading at BELOW its net chash in the bank!!! (including anticipated losses untill (1 year) it makes a profit again according to wallstreet analysts!!) and as far as I know there are no particular bad rumors about it. It seems to me a golden opportunity on which I just put real cash on today. So not all the time do you have to trade on rumors though I agree with you that often that is what happens.
ohkrlll (44.47) Submitted: 7/31/07 11:25 AM
@ abitarecatania BUY PUTS! Because you don't know how much UP it will go before it comes back down (especially in this bullish sector) and with a short you need to keep the margins which can really hurt if the stock goes up a lot!
HonestK (95.41) Submitted: 8/02/07 2:16 PM
I love the "Get Out of Jail" card Mr. Economou issued himself. I'm referring to CTMEDIC's analysis that Economou is upfront and honest when making this statement:“Cardiff may give preferential treatment to vessels that are beneficially owned by related parties because Mr. Economou and members of his family may receive greater economic benefits.”It looks like he's got it all figured out. First siphon all of the cash out of the publicly traded DRYS company. Then after the lawyers and Feds show up, rub their noses in this prospectus.As Jeff Skilling would say, "Mr. Economou GETS IT!"
dwot (100.00) Submitted: 8/25/07 11:17 AM
This "scary rip-off" sure looks like it is making lots of money right now, and they appear to be updating their fleet, selling off old ships and buying newer ones...I have heard of some companies not being able to book ships to move their product as the demand for ships right now is so tight...There are definitely highly questionable arrangements with this one, but that is the market as a whole. I am questioning whether on this one it was a plug your nose and still profit, abet at a lessor rate...This company appears to be making money hands over fist, very different than how I tear apart useless companies on my blog...Having said that, there is a big chunk of earnings coming from the sale of vessels in the last financial report, but even excluding that the P/E is still around 10 going forward 4 quarters...
hall9999 (99.53) Submitted: 9/11/07 3:52 AM
Thanks for the laughs. My god this is funny stuff: "but don't you think that the legal powers and the sec and procedures thats need to be put in place for a firm to go public will prevent this company from going belly up.""yes he may have been dodgy before but not necesarily now." Sure, I'll trust the SEC to keep companies from lying to me long enough for me to lose my shirt. And yes, I'm willing to invest my money with people who "used to be" dodgy. I wish I'd known that the CEO of OPBL.OB used to be dodgy.
ctmedic00 (99.98) Submitted: 1/16/08 1:00 PM
Are you going to venture back in to shallow waters with this pick? We're both in about the same predicament here but which way do you think this elevator is going to go with the tightening of credit, softening of various economies and the continued shenanigans of the always interesting Mr. E.
pinti (< 20) Submitted: 7/30/08 5:49 PM
look at our back and forth over this pitch you salted me for being shorted sighted oh how wrong you were. i hate to say i told you so but i told you so, the signs were there and you chose to ignore them.
ctmedic00 (99.98) Submitted: 10/09/08 11:59 AM
Yep boy do I feel stupid now... I was so wrong about this scam. Boy it's high flying isn't it. Ok onto reality I figure that good old George should be cashing out sometime soon and when he does this will be in the BK pile where it belongs. Junk is junk even if it takes some time to get accurately valued.
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