DryShips Shares Jumped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of dry bulk shipper DryShips (NAS: DRYS) jumped as much as 12.8% on moderate trading volume.
So what: This is a conflicted tale of good news and bad:
- The crucial Baltic Dry Index, which tracks shipping costs, actually took a rest from weeks of continuous increases today
- Bloomberg contends that Chinese shippers might be able to negotiate lower rates at this point, putting another lid on that Baltic Dry figure.
- But none of that matters because Hurricane Irene didn't damage DryShips' oceangoing fleet nor its port assets, and on the whole, investors are pouring money back into this out-of-favor sector again.
Now what: Need I remind you that bulk shippers are volatile in general, and DryShips more than most? Over the last five years, DryShips shares have covered a price span from over $121 to below $2.20 per share and still sit close to the bottom end of that range, with dividends on indefinite hold and dwindling cash balances being propped up by rising debt. In fact, another reason why DryShips is moving faster than rivals Diana Shipping (NYS: DSX) , Navios Maritime (NYS: NM) , and Paragon Shipping (NYS: PRGN) today is that the company just secured the right to sell shares of its Ocean Rig UDW subsidiary, thus staving off balance sheet demons a little while longer. DryShips is a gamble, not an investment.
Interested in more info on DryShips? Add it to your watchlist. We won't judge.
At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.
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