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You should re-read the news. Kalani is done, GE's shares are restricted, no more RS unless unaffiliated shareholders approve.
Considering there are only 36 million or so shares in the float, this has the potential for an epic run. Don't believe what happened last November can be repeated now, but this is getting ready to explode.
This time next week the pps will be an entirely different story.
True. No one affiliated with the company will be able to vote for a RS though. Restricted shares and unable to conduct another RS, not that it will be needed. Forgetting GE/DRYS history for the moment, what is the enterprise value of DRYS today and over the next 12-18 months? Pick a number or multiple. Time will tell, of course, how it plays out, but I believe the pps is destined to be significantly higher.
I suspect the MMs are helping to drive this back down at the moment. They had to be just as surprised as everyone else. Whatever naked short positions they were in will need to be covered too. Magic hour today should be very exciting!
The pps is just passing back through where it was after the last RS. Everyone that shorted after the RS is either out or under water now.
Read the news. His shares are restricted:
(i) it has terminated the common stock purchase agreement, dated April 3, 2017, by and between the Company and Kalani Investments Limited, a company organized and existing under the laws of the British Virgin Islands, effective immediately; (ii) Mr. George Economou, the Company's Chairman and Chief Executive Officer, has agreed, either directly or through his affiliated entities, to refrain from re-selling for a six month period any Company common shares to be acquired by him in the Proposed Transactions; and (iii) the Company has agreed not to conduct any equity offerings until after December 31, 2017, without the prior approval of the majority of its unaffiliated shareholders.
I doubt shorts will want to stay in this and there is likely going to be a push to get this above $5. Once it goes above that level, a lot of larger players will no doubt enter and push the pps higher from there. More a matter of when versus if.
EH - thx. Suspected for a while now this is how it would play out. GE wasn't about to lose control of DRYS and it made sense he would pick shares up. What will be interesting to see is what the final OS is and what the books look like with juggling debt for shares.
I don't know if GE completed the Kalani dilution or is swapping $100 million from the revolver debt for the shares. Either way the dilution is over and the risk came out of this in a blink. Two things needed now: what is the total OS and what is current book value? My guess is something less than 75 million shares, but $100 million in debt just moved off the books.
This should be well on its way to book value today.
Morgan Stanley just filed a new SC 13G/A
ash - BDI was 13x higher at its peak. My guess is 2x-4x higher next year.
Anyone looking for $2.02's yet? LOL
Unlike the past several months, the new shares are being distributed at higher prices. That in its self is a very significant difference.
At the current pps and the slower pace kalani is selling shares, it seems very likely DRYS will end the dilution with under 50 million shares outstanding. Considering most shipping companies have a high outstanding count, it seems very unlikely DRYS will do another RS.
Let's say they do another rs after the dilution is completed. Maybe 1:5, for instance. Without any additional downward pressure from Kalani and the pps significantly over $5, my guess is that institutional buyers would be all over this and the pps would rocket upward to at least match book value if not a multiple of future revenues. I just don't see a RS happening, but if it did I also don't see the pps moving down.
ash - There are a number of factors that are driving the BDI and spot rates. Much of it is cycle to the industry right and it typically moves up this time of year. Long-term though, a lot of capacity has been taken out of through scrapping over the past 3 years and owners have slowed buying more ships. That in combination with world gdp improving the past year and continued scrapping will move the entire sector forward. I am not looking for a huge run in the BDI this year, but I do expect it will continue improving possibly as much as another 40% this year. That may sound like a lot, but the top was over 13k for BDI so there is much room for improvement. From a DRYS perspective, spot rate world economies improving will only add to their revenues. The amounts associated with the time charters will provide a healthy base and spot rate improving will add significantly to the bottom line. Still a few unknowns for DRYS, however if GE doesn't do anything negative to shareholder over the next 18 months, people will be looking back wondering what kept them from getting in now.
ash - it certainly does appear the selling pressure from Kalani has been reduced, which is allowing the pps to find its equilibrium. Whether $2 is the trigger or not, the pps has been steadily advancing over the last several trading sessions. My sense is the financials and management's discussion of the next few quarters to year will extend the advance. Once the pps stays above $5 for a bit, the big players will move in and the pps will move violently for several days probably over shooting the equilibrium.
The fun part is to use GE's projected ebitda for next year and apply a few pe multiples. That in itself is fairly revealing. For several years I have predicted 4Q 2017 to be the point where dry bulk rates start ramping back up. I don't believe GE's numbers would have accounted for that and were likely somewhat pessimistic. Whatever the numbers end up being, the one certainty is DRYS is very much undervalued today.
BDI is up again today @1050. Spot rates have remained in a range that would make DRYS Panamax fleet profitable. The question then becomes what was their utilization rate in 2Q? OSVR fleet is a loss. The only good news there is the ships are laid up minimizing costs. A big unknown is what impact the new ships had to the bottom line during the quarter.
Should prove to be an interesting financial report and, perhaps more importantly, what 3Q and beyond is shaping up.
All very old news. The information is included in the financials every quarter.
If I understand what you are staying, roughly 2 million shares traded in 8 minutes?
It's the 3 million shares that were just traded in a blink that should give everyone pause. Someone with deep pockets just added a large block of shares.
Wonder if GE just bought 3 million shares?
Tbone LOL
oops. there goes $1.40
Yes it would. If everything kicks in by October, that would be a small fraction of the real value. Don't get too excited though - nothing happens until it happens.
The selling pressure has dropped way off suggesting both Kalani and shorts have slowed significantly. Does make me wonder what we will hear during financials release?
Without the selling pressure from kalani, I wonder how that would affect the pps? My guess is it would allow the price to advance and limit the number of shares Kalani would need to sell.
How do you know it is Kalani versus robots or MMs?
Sam - Okinawa is still working away. As far as price is concerned, it really depends on what contracts and revenue streams are coming in. From what I know at this point, if everything should work out as expected, .05 would be giving the shares away. The reality is that if/when FASC gets relisted there will be a lot of information available to base a decision on.
Sam - There is no way to know with 100% certainty when or if the situation will change for FASC. The Canadian project is but 1 of several that appear to have legs though. 6 weeks or so and we should have the first answer. Interestingly enough, a Florida project may be announced very quickly on its heels. 2 additional projects are supposed to be contracted in October. None of the projects is a direct contract with FASC, but they will be providing equipment as sub-contractors. If things work out as expected, Brian and Adam will be happily complaining about all of the work they have to do.
TBK - Based on the <5% volume Kalani traded last week, the total yesterday may have been closer to $400k. I don't think they are in a rush to sell shares at the moment and I wouldn't take that as a sign the pps is headed down. There seems to be support here.
I am not expecting positive earnings from DRYS for 2Q, but they will be closer to break even and would be a significant improvement over the same quarter last year. What I am hoping for is more information on future earnings and possibly more refined numbers. 2 factors will begin weighing in: 1) NAV and 2) price to earnings. Both of these are undervalued just based on what is currently known.
Let's assume a calendar year 2018 ebitda of the $77 million GE has stated and apply a pe of 15x, which would be low for a shipping company. Also assume 50 million shares outstanding and the pps would be around $23. That's a far cry from where it trades today because of the scary $33 million dollars remaining in the Kalani dilution. I think the big fear factors of unabated dilution and reverse splits is over and DRYS will quickly get much more focused on what the future looks like.
The laws of supply and demand might have a bit more to do with inflation.
Tbone - it is an index not the spot rate. This might help with your understanding a bit: http://www.dryships.com/pages/report.php
Under the index values for each ship class are the current spot rates.
The reverse splits had an effect on GE's preferred shares just like common. Even though each of his preferred shares carries 100,000 common votes, each reverse split cut the number of preferred shares just like common. He now has roughly 290 preferred shares left. So GE no longer has control over the vote. As I noted earlier today, GE is no doubt planning some way to maintain that control. The most straight forward way would be to buy a large block of common while the price is low.
Last year they reported on Monday 8/8. Some time this week probably?
After the last RS GE's voting control over DRYS was removed. He currently has less than 3 million votes against 31+ million common outstanding. My guess is he will buy some amount of the Kalani distribution moving his ownership up significantly.
DRYS hasn't updated their financial calendar nor have they officially stated when they will report. Presumably sometime this week.
I am seeing $1.31 by $1.33
I don't know if I would describe it as panic. However, I do think there is a tipping point where that remainder of the Kalani dilution simply won't matter any more and there will be extremely heavy buying. Again, pick a number on what percentage of DRYS is shorted at this point. I have seen numbers ranging as high as nearly 80%. With heavy buying any stops set on short position would get triggered adding to the buying and upward momentum.
Many seem to feel another RS is coming and would continue to result in further downward pressure. I don't happen to subscribe to that theory instead thinking there is no need for another RS. But let's play that out for a moment. Assume GE does another 1:5 RS and that leaves 6 million outstanding and a pps of $6.50. Wouldn't that trigger any institutions that have been sitting the sidelines to weigh in and drive the pps even higher. If Kalani sold the entire remainder of the $33 million into that, less than 5 million new shares would be sold. It just doesn't make any sense to leave DRYS with 11 million total shares outstanding (or even less). Just the same and for sake of argument, a $45+ NAV would result from that. That seems fairly close to what is expected now.
So I don't see another RS happening and if GE did ring another one out here, the end result still wouldn't drive the pps down which is the primary goal for shorts.