DryShips, Inc. (DRYS)

Shipping stocks should be one of the first industries to benefit from the Chinas iincreased spending on raw materials. This stock is also rumured to be taken private.

I’ve been watching this stock for 2 years now. I’ve watched it through the good economic times and the bad. I’ve seen it fall from a high of nearly $130 down to $2.72, and now it has bounced up a little to $6.59 at yesterday’s close. Although their debt situation is not great, they have been making progress in restructuring it. Last Thursday they reached an agreement on waiver terms for $116 million of debt. The company has two businesses that were both hurt in the economic downturn, dry bulk shipping and deep water drilling rigs. Both of these businesses will benefit as the economy slowly recovers. They are not in the best shape now, but I am going against the crowd and investing long term now.

This stock should get a bump soon, prone to swings and runs it still has pretty solid financials and should calm down by summer and begin it's ascent again toward the 90's.

Shipping company with strong fundamentals and very, very low P/E at this price...

3. Explain your rationale.

(This is called your "pitch" and is optional.)

studying companies like this one make me feel real depressed for those about to loose thier job.

Yes, shipping will pick up on commodities.

But I cannot be convinced about this one.

Hopeful bottom call

“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).

Don't you guys remember last time we all thought drys was going to die? That's right, it turned into one of the craziest short squeezes ever. Top Fools lost thousands of points. Logic is completely unreliable when it comes to this company.

Baltic DI reached bottom, fundamentally reached bottom. Now just waiting for freight price to stop dropping. Eventually it will have to move higher. Looking for $20 by the end of year.

This company wont go sink, it may go down some this year but it will be right back up near 100 hopefully in a year or two

With the continued decline in the price of fuel, it would seem that the bottom line would improve. Besides, emerging economies will need "stuff" when the global downturn reverses, which, in my humble opinion, will be soon.

I think this latest pullback is a bit too much.

Several reasons that this stock will significantly outperform the market in the next 9 months - just getting out of seasonally weakest Q and industry fundamentals will improve better and faster than most analysts are predicting thus with positive surprises AFTER Q1 (expect Q1 to be slightly below or at consensus).

I like the dry shippers as a play on credit crisis. I just read that South Koreans were canceling construction on 40 ships because they couldn't secure financing. Although weaker economy around the world and comoditiy collapse has depressed the shipping rates, it should stabalize later this year. Also, if the South Koreans really cancel the 40 ships that should put a floor on the shipping rates. Correct me if I'm wrong.

Bulk is hot and DRYS are exposed to the spotmarketprices.

Drybulk is good and undervalued. Steady revenues, commodities play, how else are countries going to get the stuff they need???? DRYS and EXM are the two best.

bulk container carrier...upside profit potential is driven by rising utilization, margins and prices....shipping utilization being driven by increasing worldwide trade in bulk commodities.

shipping will start picking up as the economy slowly recovers.