Who is George Economou (GE) and how does he affect DryShips stock? NASDAQ:DRYS
George Economou, also commonly referred to as GE for his initials, is a Greek billionaire born in 1953. He is the CEO of DryShips, as well as another company named Ocean Rig. He also owns Cardiff Marine, a company that holds oil tankers and dry bulk ships. GE has frequently been criticized for his treatment of DRYS stock shareholders, and many rumors speculate about his dubious intentions of personal gain at the expense of DryShips shareholders.
GE was born in Athens on August 4, 1953. His father worked in the paper industry, but knowing others who achieved significant wealth, he decided that the shipping industry was the best way to get rich. He has a both a masters and bachelors degree from Massachusetts Institute of Technology, with degrees in naval architecture, marine engineering, shipping and shipbuilding management. After graduating, GE worked at various shipping companies in New York, and then later returned to Greece.
Back in Greece, GE establishes his company Cardiff Marine, and purchases his first ship in 1986. At this point he was only 33 years old. In 1998, he entered into his first entrepreneurial shipping venture by raising $175 million on Wall Street to fund a new venture called Alpha Shipping. Within just 1 year, however, the new company failed to make a debt payment, and quickly went bankrupt. For GE, however, this ended up being a profitable situation - he walked away with being able to purchase Alpha Shipping's ships for just 37 cents on the dollar.
In September 2004, GE formed and incorporated DryShips in the Marshall Islands. Despite being based in Athens, the decision to incorporate in the Marshall Islands was strategic from the start. By incorporating there, DryShips has been able to avoid taxes from the Greek government, despite basing its operations in Athens. By 2005, GE took DryShips to NASDAQ to list the company under the ticker DRYS, and raised $250 million. The IPO price for the newly traded DRYS stock was $18 per share with 13 million shares offered.
GE's timing was excellent - from 2005 onwards, shipping rates increased significantly, primarily due to global economic growth, especially from China. DRYS stock increased in value from just $18 per share at its IPO, to nearly $120 per share in October 2007. Adjusted for the numerous reverse splits, each stock today would have been worth $42 million per share.
Unfortunately, the good times did not continue as a global downturn in shipping revenues cut into DryShips' income. Accusations and concerns about nepotism and conflict of interest arose. As early as 2008, peers commented, "I believe he runs DryShips as if it's his own private company. I am not going to be part of anything where a chief executive is self-dealing."
One of the most damaging actions he has taken against DRYS stock has been his continued issuance of new shares to raise additional capital, at the expense of massively diluting existing shareholders' value. In response, he has responded in interviews as such: "Who are my investors? Computer models, hedge funds and some institutions that go in and make $10 and get out."
