This is my first post here. I find this to be a fascinating stock story. Yes I have been buying some and I am down somewhat, but not enough to hurt... yet.
I think that posters here focus too much on specific Buys/ Sellers, trading volumes/ patterns, and share structures without considering basic stock market forces that drive these things. And fundamentals...
Basically I think this is a value play that will turn at some point in investor's favor as the year unfolds, no matter how unscrupulous this company is. I have been looking at this over the last few days, including the excellent SA article, and these are my thoughts. If anybody disagrees with my basic points let me know.
- the company is doing this to save itself from oblivion because they had purchased ships, possibly expecting much faster recovery from this recession than has occurred ( and they are not the only ones), and they cannot pay for them without extraordinary measures like this.
- After this recovery is complete and they own these ships, they will have a great fleet and an awesome balance sheet (at the expense of original investors) and will likely be able to undercut the market on shipping rates.
- if the fleet is modern it will likely be very fuel-efficient, giving DRYS another advantage in the marketplace.
- It seems as if DRYS was looking at insolvency unless they did something drastic, so the reverse splits could be justified on that basis.
- in addition to doing reverse splits, the company is selling to a related party, who is then dumping the shares for a profit on the market. So... if the shares have fallen so far and his discount is no more than 6%, how is he making money dumping and what is his end in doing that? The argument kind of falls flat.
- What I have really noticed is the volume after just the last split... huge. That is what made me notice. In that sense, many of the arguments made about the role of Kana.. what's his name are somewhat overblown. If he has been dumping shares all of this time, why hasn't the volume been there before?? I tend to think that other investors are starting to catch on to the opportunity here.
So, I am just going to watch and wait. This is fascinating to watch. I bought some and then set a price where I thought it would never go again. It blew through it. So I am done buying until I understand this better.
I think there are 2 forces at work here; management doing R/S and issuing shares to raise cash, and new investors seeing the compelling opportunity.
I think that in time, over the next few months, the second of these forces will dominate and the share price will rise. Fundamentally, this stock is a Strong Buy right now. They have a cash flow problem which I believe is solved. They have a strong future.
Even if they do another Reverse Split, I think shareholders buying now will do well in the medium time frame, like a year.
Having said that, I would not throw a lot of money at this until things become more clear.
The daily show and volume has been fascinating. But caution and patience is required. I did not show enough of those...
You must admit, at this point we have no idea what the stock is worth, the difference between $1 and $3 is really meaningless... and one can't stay glued to the screen all day.
So good luck to all day traders. I myself am a swing trader who will wait this one out and be very... very patient with it.
In any event I don't see a bad outcome going forward.
Thoughts?
