Fellow shipping investors, 

The link between the BDI Index and the shipping companies that carry dry bulk is established. What i am finding difficult to understand is the magnitude of the recent slump in the index which is obviously a major contributor to the slump in the related shipping stocks. Can anyone please try and explain the reasons behind the index's slump and any ideas on when this might turn and the reasons for the turn around should arrive ? Many thanks.

With thanks.

RP

 Any thoughts on the Steel, Coal and Iron Ore out look  for China for the remiang of the year ? Drys and EXM are postion to be the big winners as the BDI has turn around and is ready to firm in the coming week as China will resume its normal activity and the banks have reduce the interest rate and the bank will relax lendign policies...Any thoughts ? 

How does DRYS and RIG fit together as one company?

Will the purchase of RIG by DRYS effect the share price of DRYS stock?

Will RIG and DRYS be considered 2 seperate companies?

And lastly, have there been any press releases about the above mentioned subjects?

Thanks for any information you may have.......

R Peck

Does anyone have happen to have some good references regarding the supply of dry bulk vessels in the marketplace??  

I am contemplating the current drop in the BDI...  As others on this message board have suggested, the BDI price action could be a result in a slowdown in Asia.  It also could be a result of an additional supply of dry bulk vessels coming on-line currently or in the near term.   I know many of the dry bulk shippers have mentioned that the credit crisis could negatavely affect the ship builders (DRYS earning call for instance), but I would like to see proof or non-proof of this.  

The BDI price action could be a result in both: a slowdown in Asia, and an increase in vessels.  One thing is for sure, when the current worldwide economic downturn abates, globalization will lead the correction and the shippers will be a great place to invest.  

Any thoughts??

Any references would be greatly appreciated.

Who knows or how do you find out who ships what and from where?  As coal demand continues to grow,  would like to know.  Same for other dry bulk cargos.

Thanks for the help.  GFS

      DryShips stock is set to explode. Lets see why.

#1) Value

     As of today (8/08/08) DRYS closed at $67.89 (about 2.5 Billion market capitalization)= a PE of about 4.2. Now lets put those numbers into perspective. Lets say I were to buy the company right now for 2.5 Billion. DryShips has Equity well over 1 Billion. So my risk would be less then 1.5 Billion (60%). In other words if I bought this company and then had zero customers the most I could possibly lose in the absolute worst case secenario is 60% of my initial investment. However in reality DRYS is far from being unprofitable. The company has a 1 year EPS growth rate of 658%, and the Q1,08 earnings beat Q1,07 by 309%. Lets say Tom earned $10 per hour last year, with this kind of earnings growth Tom would courently be making $309 to $658 per hour, and next year he would make $1,263 to $4,987 per hour. (I wish I had Tom's job) Now obviously DRYS can't continue to grow 300% - 650%, but it is logical to conclude that we will continue to see some increase in earnings over the next few years. As the sole owner of DryShips, even if DRYS had 0% growth, I would still put about $600 Million a year in my pocket. This means that with absolutly no growth, in three years I would have a 100% return on my investment and a perpetual income of $600 Million.

     Let's be realistic, If I call DryShips tomorrow and make a cash bid of $2.5 Billion for the business the offer would be considered for about 2 seconds and declined. So how much money would I have to offer to even be taken serious? If you owned this business, (that was putting at least $600 Million a year in your pocket) how much money would it take for you even to consider selling it? An amount equal to your next 5 years salary, 10 years, 20? Personally I would need an amount equal to at least my next 10 years salary to even consider it. That would be about a $6 Billion starting bid, this is 2.4x the 2.5 Billion it is curently being traded at. In other words it would be silly to even think about selling DRYS for anything less than $160.00 a share. So the question is who's selling DRYS for $67.89 a share. Not me. This takes us to point #2.

#2) Risky Shorts

      There is an unreasonable amount of short intrest in this stock. You can go to www.nasdaqtrader.com after the market closes on Monday to see the most current short information. Every time the stock begins to move close to an almost reasonable price the stock is attacked. A strategy that has proved very sucessful so far. The shorts scare the daytraders who scare the market into panic selling. The problem for the shorts is that the trick is geting old. A pattern is becoming clear, and (as mentioned) the stocks current value is WAY higher then the current share price[$250 according to Standard & Poor's]. Sooner or later when the stock jumps and gets attacked by the shorts some very wise individuals are going to take advantage and buy triggering a short squeeze that should be followed by a nice rally leaving shares at a reasonable price, around $140 - $180.

#3) Baltic Dry Index (BDI)

      Although the BDI shouldn't have a dramatic affect on the share price, many investors keep a close eye on it. You can see the current days BDI report at www.dryships.com , it's usually posted by 9:00 A.M. The BDI has been down for the last 21 days and is likely responsible for holding the stock below $70. Alot of buyers are geting an itchy trigger finger with an eye on the BDI. Think of pushing a rubber ball under water, you can only push it so far until it slips and shoots up. It's likely that  the next up day in the BDI will equal big jump for DRYS.

Would it make sense for a company in the steel-industry to save their Dry Bulk freight rates by FFA's ?

Or is this still a sector and instrument for the ship owners? Does anybody know if some other steel companies save their freight rates by FFA's?  

Thank you for answers.

Further to my prior posting please read Bank of America upgrade of Genco of 7/2/08. Agrees fully with what I stated.

... BofA initiates Genco Shipping and Trading (GNK 65.63) with a Buy and an $84 tgt following pullback and based on the co's performance track record, return-focused decision-making and experienced management team.

The fact that the BDI has had a precipitous decline in the past month, i.e. 30 days, should not be a detriment to the shipping companies, rather, with reduced rates it should encourage increased day and charter leasing activity. None of these dry bulk shipping company stocks should be so closely tied to the BDI. It's rather ridiculous, and akin to saying that if the cost of a gallon of gasoline, i.e. U.S., dropped to $2, the refiners are going to lose money. Hardly the case. And even if the cost of a barrel of oil remained high, the increase in use by the public, seeing the $2 cost of fuel as a bargain, would more than make up for the extra expense incured by the refiners paying more for oil. Just as with the drop in the BDI, the door should be open for clients to seal some deals at bargain rates. Economic expansion is not going to stop in China because the U. S. has met an economic bump in the road. The drop in the BDI should be sort of like a sidewalk sale where prices are slashed. It should create fewer numbers of idle ships.

DRYS has made a feeble attempt to regain its glory when it touched a 52 week high of $131.34, only to see numerous failed rallies met with technical resistance, or I should say short selling. This can easily be explained.  With a small number of shares outstanding and a bit of illiquidity, or I should say slim number of the float, the stock is highly volatile. The Short Sellers have figured this out. The planned 3 for 1 stock split never came to fruition simply because when the stock price approached the upper 80s or mid 90s and more recently 116, it was met with ferocious short selling. So much so that the stock has been placed on the "Naked Short" list. The shirts at headquarters don't want to split the stock and bring its share price down the the 20s. With such a small number of shares outstanding, the company is basically held captive by Short Sellers who continue to pound the stock into virtual submission. Mr. Economou can participate in as many CEO forums as he likes, sing the praises of the dry bulk sector and the growth of China, and espouse how the U.S. economy has no affect on DRYS. The fact remains that until he increases the shares outstanding, builds investor confidence by reducing company debt and shows some confidence in his own company by purchasing stock, the company is destined for more of the same. I closed out my position in DRYS after emailing Dryships head of Investor Relations, Nicolas Bornozis, and Mr. Economou, with some questions regarding DRYS fundamentals and balance sheet, only to have neither of them respond.  In hindsight, they both did me a favor in encouraging to sell in the low 100 range.

The management at DRYS may know how to run the fleet. They sure don't have a clue how to create value for their Investors.

Timothy Skaggs 

Dear Sir

 Kindly send me below inquiry

Best Regard

FARHAN MUSTAFA

 Comment on Golden Ocean

I have done a ton of research on this company. This company is a winner. They increased the dividend last quarter to .55 cents. They have about 25 new ships on order, and they are going to own the dry good shipping, much like FRO ownes the Oil shipping. FRO and GDOCF are winners. You should pile into Golden Ocean. The stock will eventually move to the NYSE, just like FRO and that's when it will trade for $30 or more a share. DSX isn't nearly the company as Golden. Golden has the management experience from FRO as well. You have a winner here, you will kick yourself when the stock doubles if you don't buy in. Global companies that are supplying the increasing demand for dry goods in China, Russia, India, Brazil, etc are growing and will continue to grow.

With all that has been going on in Navios Growth pipeline can make an investor feel like we have been in head winds for a long long time, the stock has currently seen the same head winds never the less i have been adding to my position with pure confidence that Navios management and years of shipping experience and prudency will be rewarded......

Any Thoughts?

By Alistair Holloway and Alaric Nightingale

June 12 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, posted a record decline as port congestion eased and on speculation China may buy less iron ore.

The index tracking transport costs on international trade routes dropped 963 points, or 8.7 percent, to 10,142 points, according to the Baltic Exchange in London today. Rates for so- called capesize vessels that typically haul iron ore for making steel fell 15 percent to $180,237 a day.

``There's potential for slowing iron-ore buying in China'' after the nation's stockpiles rose to a record, Peter Norfolk, a London-based shipping analyst at Simpson, Spence & Young Ltd., said by telephone. ``We have seen signs of port congestion coming down in China and Australia.''

Chinese authorities said today the nation's ports should submit plans by June 20 to cut inventories, reducing congestion. China, the world's biggest steelmaker, imported a record 42.9 million metric tons of iron ore in April.

Rental rates for capesize carriers, normally used to ship about 170,000 metric tons of iron ore, have fallen 23 percent since climbing to a record $233,988 a day on June 5, according to the exchange.

Chinese steel producers have yet to agree to new annual contract prices with Australian iron-ore suppliers such as Rio Tinto Group and have bought more ore from Brazil. BHP's Chief Executive Officer Marius Kloppers said on June 5 it ``would not be smart'' to forecast when agreement may be reached.

Domestic Chinese iron-ore prices has been ``slipping a little bit down,'' Andreas Vergottis, a London-based research director at Tufton Oceanic Ltd., the world's largest shipping hedge fund, said by phone. Combined with shipping costs from Brazil there's less incentive for Chinese steelmakers to import iron ore, Vergottis said.

Shipment of as many as 30 trainloads of iron ore to Brazil's ports was halted by protesters today. Iron-ore cargoes from Brazil to China are the largest market for commodity carriers, based on volumes and the amount of time it takes, according to Simpson, Spence & Young.

``We expect freight rates to fall further in the next few days, which could put further pressure on the sector companies,'' Petter Narvestad, a shipping analyst at Fondsfinans ASA in Oslo, said in a note to clients today.

To contact the reporters on this story: Alistair Holloway in London at aholloway1@bloomberg.netAlaric Nightingale in London at Anightingal1@bloomberg.net