Mr B - I share your concerns and agree the future is unclear for dry bulk and DRYS. The entire first quarter has been off for dry bulk. However, DRYS capes have been on contract and ORIG hasn't been impacted(yet) with their earnings. Panamax is DRYS weak spot at the moment, but I believe the tankers will have a signifiant offset in revenues. This quarter could actually see a profit. 2nd quarter spot rates should stabilize and move up a bit.
The unknowns on the overall supply side of the equation is how many newbuildings contracts will be delayed or cancelled along with scrapping rates. These are the variables that will be most impactful on shipping rates and ultimately DRYS pps. With that said, the TNKS IPO is what I am expecting to push DRYS pps back into a more normal range. That should take place within the next month. Considering how high anger rates are, the IPOD should do really well. This should carry the pps higher through the second quarter. Spot rates are expected to rise in the third quarter.
ORIG, which is a variable in DRYS pps, has been pounded down along with oil prices. One rig is being returned 5 months early and there is risk that other rigs will be returned or the rates renegotiated. They are also tied with Petrobras and the market has assumed a big risk with PBR's outcome and potential fallout to ORIG. I think this is overblown and both PBR and ORIG will slowly recover this next quarter. ORIG improvement means DRYS will also improve.
So while I am nervous about DRYS and GE's constant dilution, the next leg up should take place over the next few weeks and then it will be time to reasses. I don't have any doubt once the PPS moves back closer to $2 GE will launch his next 20% haircut for shareholders.
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