Friday, February 13, 2009

BDI and BCI rally ends

The 160 % run up in the BDI the last 3 weeks came to an abrupt end on Thursday. The BDI and BCI both turned down at about the same rate they rose the last week. See the DRYS market page link here for the update.

With the recent lack of rally strength in the US markets, the Dow's refusal to rally over 8300 on recent rallies (prior rallies tested 9000) and its recent problems rallying above 8000, it looks to me like the next leg of the bear is about chew its way through the market again. I see 7000 for the Dow being tested, maybe by next week, if not today, partly because of falling oil and other commodity prices as we approach the expiration of options next week. I also expect oil to test the $30/barrel price before options expire next Friday. It already broke into the $34.xx range yesterday, and US oil inventories have been on a relentless rise on weekly reports for some time now.

Also there was other bad news yesterday of a charterer bankruptcy that might affect GNK, NM and DRYS stock and the recent announced sale of a ship by DRYS.

News on the Charterer bankruptcy, Samsun Logix, is at:

Monday, January 26, 2009

DSX signs charter with Cargill for Panamax

Today's news was that DSX, Diana Shipping, signed $9,400 per day one year lease for a Panamax with Cargill. The BDI today showed a spot market rate of $4482 per day for a Panamax. This is the third lease by Cargill I have seen in the news the past week, for long term charters at rates well above the BDI spot market rates, which means Cargill believes the rates will go back up very soon, or at least that they have bottomed. And the bottom today for the Cape is already nearly 3 times above the low in the fourth quarter of last year. I also noted that the charter was only for 11-14 months, which to me means DSX expects average rates to be higher by then.

Genco Shipping had news today that it has amended its 1.4 billion dollar credit facility. While it still plans to receive it's 3 new Cape size newbuild ships later this year and has confirmed the credit line to pay for them, it has been forced to suspend it's dividend until it has proven that it can once again satisfied its collateral maintenance facility with the bank. I am assuming that the bank has devalued the current ships collateral value thus breaking the earlier loan covenant.

Bad news, the Genco dividend is gone for now. Good news, the Bank is going to work with them, including completing the purchase of 3 new Cape ships this year.

The BDI was up again today +15 reaching 995, with the Panamax index up 5%.

I am starting to wonder if any of the shippers are going to keep their dividends?

Genco and Diana Shipping were both up 7 to 10% today in trading, as was EXM.
PRGN and SB were up several percent, but not by as much as the others. Dry Ships is still trying to defy gravity, on what I consider to be a dead cat bounce.

I went through the Paragon Shipping web sites online financials today and could not find any good reason to temper my belief that they might be one of the few dry bulk shippers to maintain their dividend at least at some level, and I expect them to report a healthy profit, as there has been no bad news about them, and most of their ships have healthy long term charter rates. They reported in the third quarter that they already had 85% charters for 2009, and 100% for the remaining quarter of 2008. Add to that an increased .50 cent quarterly dividend on a $5.39 a share stock, and all I can ask is:

"What's in your walllet?"

Sunday, January 25, 2009

Baltic Dry Index and dry bulk shippers update

The BDI went back down briefly in late December, 2008, to a low of 771 on Jan 4th, 2009. Since then it has risen twice, with a small drop between Jan 16th and the 20th, and then it took off at an accelerating rate from 871, reaching 980 on Friday, Jan 23, with the spot Cape rates nearing $18,000 per day! The last 2 days the BDI has risen by 80 points, nearly 10%, from 900 to 980.

On December 4th the BDI hit a record low of 663. The spot rate for the Cape ships, the largest, and most cost effective, has essentially doubled since then. Somewhere I read that the Cape ships would be the first to show a serious recovery if the BDI had truly bottomed. It looks to me as if they have.

Add to that the fact that EXM announced a few days ago that they took delivery of their new Cape ship late in November, and also announced that it was immediately put on a 5 year long term lease at $39,000/day, which is way over the spot market for the last 4 months. I am beginning to realize that the spot market does not include the daily rates being paid on long term leases. It seems like the major shippers, giants like Cargil are grabbing up the new Cape vessels as soon as they hit the water (Cargil has taken very long lease positions on some recent new build Cape ships as (or even before) they hit the water, and at rates 5 times to 8 times the spot market rates we have recently seen in the BDI. This makes me think they know something we don't know, as the Cargil company is one of the oldest and largest in the commodity business, and they seem to like brand new Cape ships).

While I have recently dumped my Dry Ships stock and its CEO, I am still holding, and even buying EXM, PRGN, and SB dry bulk shipper stocks. They are some of the few who seem to have enough stable long term leases on their ships at great rates, and have so far kept their very high dividends. If they don't cut their very attractive 20 to 35% dividends this time, and with the currently increasing BDI and BCI rates, their stocks should soar over 100% from these incredibly cheap levels.

My only concern this week is that the ship companies seem to also follow the wider market which seems to be following the oil and gas inventory reports and also seems to be hyper worried about banks again, and the pending quarterly reports and jobs reports. The monthly natural gas and oil futures just expired last week, and the energy futures seem to be running a monthly cycle which is in the early rebound stage right now which should put some upward pressure on the market, along with an increasing BDI, but this week's earnings reports may set the ultimate market direction.

I was encouraged by the recent IBM quarterly report last week which seemed to say that the world is not coming to an end after all. I had previously written IBM off as a GE like, bloated, over sized, no where left to grow company, especially when they sold their laptop company to China. Surprise! IBM is back.

I have done a lot of exhaustive research on most of the US stock market traded dry bulk shippers. So far I have picked EXM , PRGN and SB as the best bets for continued large dividends, large because their stocks nose dived in recent waves of panic and fear, and they are likely to be big winners in the next month, and beyond. My next post will include comparisons of the PE ratios, book values, debt, debt ratios, details on the ship fleets and leases, and other relevant facts I have located. I have found a lot of information on various webs sites, recent online articles making comparisons between the dry bulk shippers, and some of the reports and articles I have run across seem to be posting data that is out of date, and or miss leading in various ways. Several are still showing companies with dividends that have already been dry docked.

Saturday, January 24, 2009

My Stock Investing Blog Introduction


I have delved back into the perilous world of gambling on stocks (many call it investing) after a long leave of absence, 20 years to be exact. My last experience with investing in stocks was before, during and shortly after the crash of 1987. It taught me a lot.

So far this time, since October 2008, I have looked at and invested (note that I did not call it gambling this time) in several biotech stocks, oil and gas stocks and bulk shipper stocks. I have been doing a great deal of research lately on several companies in these areas and today I decided to start posting my findings and thoughts on several of the ones I find to be compelling.

For those who might be curious about my background I have a degree in Chemical Engineering, and I do green environmental consulting with my own company.