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My guess is the pps is going down in conjunction with the BDI, which has been drifting down for a couple of weeks. The chart pattern has a nice stair step going up though. South American grain season is starting and should push prices back up and the general cycle should continue to improve going into the fall.
TBG - LOL
I-Man - hope you catch a few trout on your trip. Based on what DRYS looks like right now, my guess is the pps will start running up next month and may actually take a nice jump when GE provides more info on the DGAS spin off. I am thinking it may be 1 DGAS for 1 DRYS. Considering that DRYS will maintain 51% of DGAS and assuming there are only 94 million DRYS shares outstanding at the time, that would mean DGAS would start off with the following share splits:
DRYS - 47,940,000
GE - 35,466,200 currently owns 72,421,515 shares of DRYS or 70.6%.
Assuming 94 million after the buyback, GE will own
roughly 77% of DRYS
Everyone else will share in the remaining 10,593,800. Maybe this will be a catalyst for DGAS and the pps will run up a bit.
KR - DRYS hasn't provided any more details on the spin off regarding when or how many DGAS shares each DRYS share will get. The latest F-1/A filed for DGAS updated some of the information to align the filing with the presentation documentation that was provided last week. There simply aren't enough details yet, which leads me to wonder if there is a link between the buyback and spin off. Time will tell I suppose.
GE is on track to remove 1/3 of the shares that are essentially the float for DRYS. It seems clear he isn't selling any of his shares. I wonder what the impact to the pps will be as the number of shares drops from roughly 30 million to 20 million? I am also wondering if the Gas Ships spin off will take place prior to the end of the buyback. If that is the case, it seems to spin off won't happen for 2-3 months given the pace of the buyback.
Time will tell, of course. For now though, we are starting into the South American grain season, which should start moving the BDI upwards. That should drag the pps higher going into April and beyond.
peewee - Kind of wondering just that. There was a new F-1/A filed, which seemed to suggest news coming about the spin off. I am also wondering if GE would announce the finalization of the spin off ahead of buying back as many shares as possible at the current or lower pps. Not really sure what his strategy is - announce the buyback to run up the pps or announce and hold it down so he can buy cheap.
Interesting that DRYS made these announcements today. In the past, they made similar announcements after the close on Friday's. Wonder if something will be announced sometime tomorrow?
That would seem to imply DRYS will be buying another 10 million shares or so, which falls in line with my guess of 10-14 million.
The question is how much are they working to hold the pps down while they buy the shares back?
Interesting to watch as the analysts are providing highly cautious statements all the while their brokerages are adding.
The gross revenues provided in the presentation gave a glimpse into what DRYS (and other shippers) could generate this year at varying spot rates. Even at the current bottom rates it seems DRYS would eke out a small profit this year. When DGAS is spun off it will take most of the debt. That means DRYS will have a very small amount of debt. That should skew the NAV in a very positive way.
More guessing and speculation. No one knows at this point if DRYS has started buying back shares. More to the point, it isn't known if/when they do buy back shares if they will be purchased on the open market or through private transactions:
"The Company also announced today that its Board of Directors has authorized a stock repurchase program, under which the Company may repurchase up to $50 million of its outstanding common shares for a period of 12 months. DryShips may repurchase shares in privately negotiated or open-market purchases in accordance with applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The specific timing and amount of repurchases, if any, will be at the discretion of the Company's management and will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations. The Company is not obligated under the program to purchase any shares. Due to applicable securities laws, the Company's repurchase of shares will not begin until after the release of the Company's financial statements for the fourth quarter ending December 31, 2017, which is expected to be within February. The repurchase program may be suspended or discontinued at any time. The Company expects to finance the stock purchases with existing cash balances. "
trding - I believe the difference in the numbers and why they aren't adding up for you is that GE won't directly own 85% of DGAS. The split is 51+% for DRYS and 34% for GE. 15%, of course, will be left for all other shareholders. For all intents and purposes though, this is splitting hairs since GE will continue to control both companies.
Trading - The SEC has a fee estimator tool here: https://www.sec.gov/ofm/registration-fee-estimator.html#
Based on the details provided in the F1, it looks like they planning to issue the shares based on $1 per share. So the $85,829,870 also represents the total number of shares. The $10k fee reported in the F1 seems to support this conclusion. There doesn't seem to be a direct relationship between the number of DGAS shares to DRYS 104 million shares, which is why I believe the share buyback is taking place now. All of this makes me wonder if GE isn't planning to sell some of his shares back to DRYS. It wouldn't make a significant change from his perspective, but might be enough to change wall streets sentiment regarding him and DRYS. That might unlock more value than the DGAS spin off.
Legal parameters aside, DRYS is likely working towards completing the $50 million buyback. With the spin off, improving shipping rates, and some clarity on what Heidmar is adding, DRYS looks to be very profitable this year. The pps isn't reflecting either book value or a reasonable pe for 2018. Looks to be a lot of upside here. I have posted a few time recently that the number of trading shares in DHAS is likely to be a small number possibly as low as 2 million. DGAS could easily find a reasonable market value and add value to DRYS shareholders.
I wonder how mnay shares DRYS has bought back at these prices? Perhaps more to the point, I wonder what the total OS will be when the share buyback is completed? If DRYS fully exercises the buyback prior to the DGAS spin off, there may be only a few million shares distributed to shareholders other than GE.
Last day of the month trades taking place. Tomorrow and Friday the pps will likely move up.
EH - I have no idea what that means. ?
There is no accounting for where/how the pps moves. Clearly it is manipulated up and down. DRYS numbers looked pretty good though. Not surprising to see the non-Heidmar numbers to be slightly negative. The 4Q financials are still reflective of all of the crap that took place in 2017.
Still no word on the spin off. From the filing though, the book value will be around $172 million and ebitda looks to be around $10+ million per year. It will be interesting to find out how many shares will be issued and where the market prices them. DRYS book value afterwards should be in the $600-$650 million range. The pps is well below that value today. Apparently there is still a anti-GE bias to the pps. Perhaps that will change soon.
trding - I suspect the Heidmar $9.7 million is a annual dividend. Just guessing here, but DRYS seems set to gross something around $160 million in 2018. That would be a significant change from 2017.
Trading - EBITDA was higher than I expected and that was clearly due to Heidmar's $9 million dividend. What still isn't' clear though is whether that was a quarterly or annual amount. Regardless, as dry bulk rates continue to improve so will DRYS overall revenues. One thing seems clear, DRYS is far under valued.
Anyone have a number on DRYS debt after the spin off? My guess is somewhere around $166 million. ?
Still awaiting details on DGAS spin off. If GE intends to get the $20 par value stated in the prospectus, it seems there will be roughly 1 million shares in the float that are not GE related. Makes me wonder if he is setting DGAS up to run in a similar fashion that DRYS did a while back.
trding - thanks. That was all that I have seen too. Hoping to hear soon though along with more details on the spin off.
I have been skeptical there would be a resumption of dividends before 2019. Wonder what the $35 million will be used for? My guess is dry bulk ships.
I don't believe DRYS has said when they will release financials. Has someone seen an official notice? Please post link if you have.
tia
LOL. Considering everything DRYS does is to benefit GE, it makes me think he will buy up shares as cheaply as possible. By reducing the outstanding, it increases GE's percentage holding of DRYS and subsequently DGAS. With roughly 30 million shares not owned by GE today, the $50 million could buy between 10-15 million shares. Said otherwise, this could add 5% to 9% more ownership to GE just through the buy back.
Keep in mind, the share buy back isn't buying GE's shares. It's all the other shares in the current float.
I wonder if the DGAS spin off will be delayed until DRYS completes the $50 million buyback?
Consider the volume of dry shipping that China represents and the fact the place shuts down for 2 weeks for their New Year celebrations. Yep. CNY has a big impact on BDI every year.
Looking for a new filing soon and likely a PR with the details on the DGAS spin off. That in conjunction with financials, dividend, and end of Chinese New Year celebrations should provide a catalyst.
Sam - I believe your assessment of sales being announced at any moment is real enough. My guess is it will be some time before the shares are relisted. In the most optimistic view I have, it would take a minimum of 6 months to relist once Brian decides to move that forward. Can it happen? I believe so, however I would think several machines will need to be sold before he makes the move.
I expected something to have happened last fall. Since then I have also discovered the reason for the various delays. All straight up business issues that needed to be resolved, which apparently have been. Still no word on when orders will be made (paid for) with FASC. Some unknowns at this point.
If GE is able to buy back all of the shares under $4, the total OS will be close to 90 million. Said a bit differently, there will only be 20 million shares to be traded.
trding - there wasn't enough detail to know if the depreciation was a straight line approach and based on how many years. DGAS is definitely making an operating profit though. The 4th VLGC wasn't included either where is was delivered this year. Costs supporting the newbuilding project were, which no doubt skewed the results too.
RM - Hard to say at this point. If DRYS waits until next month to do the spin off, the BDI may be moving back up as it will be after the Chinese New Year. Shipping historically moves up sharply after the holiday. If DRYS pulls the trigger then, perhaps both will move up.
A lot of what happens with DGAS will depend on what ratio they use to distribute shares. Since DRYS will own 51% and GE will control at least 70% of the issued shares, it seems there will be a very small float (assuming GE doesn't intend to sell shares). Small numbers are easily manipulated up and down. Anyone's guess, I suppose, which way it will go.
The gas ships earnings were wrapped into 3Q Drys. There is also info in the F1 filing. From the filing, it looks as though they lost money for the 3 and 9 month periods. There is reference to at least one other ship included in the numbers from early in 2017, which didn't make sense to me. DGAS is probably another GE company and the numbers look odd so far.
Has anyone run numbers for DGAS and likely book value?
Don't forget there was only 1 million shares in the float last November, which made it real easy to push up to $100. For all intents and purposes even after GE's shares are unlocked, it seems highly unlikely he will be selling his stake in DRYS. Considering the $50 million share buy back, DRYS could end up with less than 20 million shares that are trading. That could easily be manipulated and move the pps up or down significantly.
Going forward though, there will clearly be fewer total outstanding shares. DGAS should help unlock some value for DRYS and DRYS shareholders; dry bulk rates will no doubt improve after this month (Chinese New Year ends); the dividend might have some positive affect?.
2 ongoing unknowns are the 6 OSVR vessels still at anchor and Heidmar. Heidmar could add something during the 1st quarter. Unclear what dividends might be coming or for that matter what the true value of the unit is. The OSVR fleet, which DRYS paid $120 million for, is rusting away at anchor. Time to off load them and re-purpose the capital?
On balance, DRYS like most shipping companies is trading at a fraction of book value. A lot of that has to do with shipping being an out of favor sector and negative revenues for several years. This is changing though. Should DRYS report positive revenues, perhaps that will start a sea change.
IMO - the only reason the pps is down where it is because GE pissed off wall street and investors. All of the self-dealing is preventing the "new" DRYS from moving higher.
With that said, today DRYS is a different company. Managements stripes are the same unfortunately and GE will always deal in a way that benefits him the most. So ask yourself, why would GE want his 70 million shares to be worth $3. Why not at least closer to book value or higher? That's at least a $250 million dollar difference to him personally. Clearly he wants the pps to go higher, which is why there is a dividend, share buy back, and a spinoff. These are all targeted to push DRYS valuation higher.
Busy week: dividend, buy back, spinoff. No ER date yet, but looking to also see if there is anything new on Heidmar. If there are any dividends due to DRYS from that unit, I would expect they would be paid out in January? Maybe some news on that front.
Chinese New Year set to begins next Frdiay and the ports will come to a crawl for 2 weeks. So no help for spot rates or BDI. However, things will begin picking up again in March.
For now, clearly the shorts are trying to move DRYS down regardless of any news. I wonder what happens when the float gets bought down to 15-20 million shares via the buy back. I doubt GE plans to sell any shares next month when he becomes free to trade his shares again. So basically by next month there could conceivably be less than 20 million shares to trade. With an improving worldwide economy, increasing spot rates, spinoff, and dividend payment, I wonder what will happen to the pps?
trding - DRYS has always used long timelines to say how long they may take to complete any action. The reality usually turns out to be they act almost immediately. So I am using their historical action to predict that DRYS is actively using the $50 million to buy up shares. I think they will minimally buy back 10 million. With prices lower though, GE could be buying back up to half of the 30 million shares in the float.
TaxiCaT - Something else I should have pointed out in my prior post, the $172 million net value of the 4 VLGC's should have a current DRYS pps valuation of $1.65 per share. Turning that around though, the remaining 32 ships have a pps valuation of $1.79, which is stupidly cheap.
TaxiCaT - The F1 filing didn't provide any details on when the spinoff would occur or how many shares would be distributed and the ratio. The spinoff will represent 49% of the DGAS value though with DRYS retaining 51% ownership. Because of DRYS ownership value, I expect they will continue to combine DGAS in DRYS financials going forward.
Here is another thought: DRYS is buying back what may amount to nearly half of the float. GE's stake in DRYS will increase to at least 80%.That means the new DGAS will have about 10% ownership by everyone other than GE.Let's say DGAS is issued with 40 million total common. DRYS will retain 20.4 million. Of the remaining 19.6 million, GE will control 15.6+ million leaving roughly 4 million shares for everyone else.
Based on the filing, the book value for DGAS seems to be around $4.30 per share if 40 million shares are issued. The unit lost money last year, but I believe that was primarily due to the financing activities for the new ships and timing of when they were employed under the charters. That should change dramatically this year with all 4 ships producing revenue.
The next thing to look at is the ratio that will be used. How many DGAS shares will be distributed for each DRYS. Again, if 40 million shares are issued my guess is 1 DGAS for every 5 DRYS. so the net result would be to shift about $0.86/DRYS share to DGAS ($4.30/5).
DRYS market valuation would be $2.58/share based on the close of $3.44 yesterday ($3.44 - $0.86). 32 remaing ships with hardly any debt on the books? This seems to be a ridiculous valuation to me.
DGAS form F1 available at SEC site: https://www.sec.gov/Archives/edgar/data/1725022/000091957418000907/0000919574-18-000907-index.htm