Danaos Corp (DAC)

[grantastic]

BDI is not relevant to container shipping rates. They are completely different cargoes that cannot be sent on the same vessels.

If you are buying stocks based on a bet that container shippings rates will go up, that's a perfectly valid speculation.

Then the question becomes: Why DAC? There are other shippers who are as much or more exposed to a rise in container rates (e.g., larger vessels, newer vessels, new ships on order, etc) not to mention DAC still has that sword of default hanging over their necks.

Yes they've lasted 2 years without consequence on their default and maybe they can ride it all the way until payoff... but my hunch is that if there is any kind of significant rally in shipping rates (which would raise the value of DAC's vessels) ... the lenders will immediately swoop in and demand their concessions while their foreclosure equity is good. That's when we could see another dilution.

You keep talking about "finding new customers" which of course they can do, the issue isn't new customers, the issue is that no new customers will pay above-market rates. So there's no way DAC can replace their shrinking charter income, because those charters were signed a decade+ ago when market rates were 8x as high as they are today.

I'm not at all trying to discourage your or anyone from owning the stock. I'm just hoping someone can make a coherent case for this company past the mirage of temporarily-good revenues which run out before the debt runs out.

The fact that you think BDI is relevant to DAC's income suggests you haven't looked at this stock any further than the simplest financial metrics, and you don't seem to accept the structural difficulties it will face in the next 5-7 years.