Danaos Corp (DAC)

[grantastic]

Buying this based on P/E is a horrific mistake. DAC has been a trap for years for people who thought the P/E was too good to be true.

Revenue is going to keep dropping faster + faster as the charters expire. Shareholders don't get to enjoy today's temporarily high earnings because all the cash is being plowed into debt service. By the time the debt is paid off, the charters will be long gone.

Eventually you'll end up with a fleet of 15 year old ships which are barely breakeven at spot rates.

DAC may or may not make new charters but they will not be at rates anywhere close to the rates of the expiring charters!

The agreement with the lender has ALREADY reacted positively in the stock price, it went up from ~$1.30/sh to ~$1.70/sh. That's about 30% jump in just a few months.