Follow Shipping Stocks?

[Dawg54]

Originally Posted by brewer12345

Funny you should bring this up. After the recent run, I went back and ran the numbers on both EGLE and DSX to see what I think of valuation. I personally require a 10% yield to hold these stocks, so that is my admittedly crude yardstick.

I think by late '07/early '08 EGLE can get to a $2.50 a year run rate on the div. By the end of '08, I think they can get to $2.60 a share. This assumes rates stay more or less where they are.

By the end of this year, I think DSX can get to a $2.70 a share run rate on the dividend. I don't see much upside beyond that barring an increase in financial leverage (which they could easily do) or more accretive ship purchases (increasingly unlikely given what ships now cost). This also assumes rates stay relatively high.

So naturally these numbers could change dramatically if rates change a lot, but as things are now I think EGLE looks like a place to take profits at 25 or better. DSX has more room to grow simply because the structure of their charters gives them more upside. But as they get up to $27 or better, I would look to start selling my core position once it flips to a LT cap gain.

Unless rates collapse (not obviously imminent), I don't see much serious downside. Both these guys will issue more stock, but timing is hard to predict and the dip would probably be short-lived.

Thanks for the review. I own both and have been trying to decide when to pull the trigger as well.

[brewer12345]

Originally Posted by Dawg52

Thanks for the review. I own both and have been trying to decide when to pull the trigger as well.

Uhuh, but don't forget the text of my signature.

Now as to what to do with my in-the-money EGLE call options, I dunno. Tempting to dump them and reap a 150% gain in a month, but I bet there is more to come...

[Dawg54]

Originally Posted by brewer12345

Uhuh, but don't forget the text of my signature.

You mean your not guaranteeing this information like Cramer?

[unclemick]

Hmmm - do people 'actually' sell stocks I keep them until they go broke or get merged - even when they change their names.

I am thinking about trying to sell some stocks every seven years whether I need to or not.

Still have EGLE and STON. Will try to rock up and sell at the end of my 7 year holding period as a mater of discipline - er or something.

heh heh heh

[Nords]

Originally Posted by unclemick

Hmmm - do people 'actually' sell stocks I keep them until they go broke or get merged - even when they change their names.
I am thinking about trying to sell some stocks every seven years whether I need to or not.
Still have EGLE and STON. Will try to rock up and sell at the end of my 7 year holding period as a mater of discipline - er or something.

I'm struggling with that problem all the time. Dell just claimed that computer sales will jump 20% next year, which presumably says good things about Intel's prospects. (And AMD's decline.)

I'm hoping everything stays groovy until I know whether I need to worry about my 2009 tax returns for the kid's college Jan 2010 FAFSA... but of course we should never let tax considerations wag the dog!

[BUM]

I unloaded my EXM Friday at the close. Why did I sell it, dunno. I don't remember why I bought it. Definitely hormonal. Not gonna do that anymore... and this time I mean it.

[73ss454]

Yeah, I dumped out of DSX and EGLE at 22. Got out just in time to keep the capital gains down. (heheh)

I'm never selling winners again also, I promise.

[Dawg54]

Looks like more positive news for shipping stocks.

Sector Snap: Drybulk Shippers Rise: Financial News - Yahoo! Finance

[Dawg54]

Uh oh. I hate to admit it, but I was watching Cramer tonight and someone called in and asked about EGLE. He admitted that he made a mistake by not recommending the stock and now says the stock has further to run.

Signal to sell?

[brewer12345]

Originally Posted by Dawg52

Uh oh. I hate to admit it, but I was watching Cramer tonight and someone called in and asked about EGLE. He admitted that he made a mistake by not recommending the stock and now says the stock has further to run.

Signal to sell?

$25 and they can have mine. I'll even throw in my 20 contracts of december $22.50 call options for the low, low price of $3.

[kumquat]

Curious brewer? DSX has given me a good %age in cash and runup. Do you think there are other cash-flow plays that can beat 10%? If they keep the money coming, I really don't care about the price increasing.

[brewer12345]

Originally Posted by kumquat

Curious brewer? DSX has given me a good %age in cash and runup. Do you think there are other cash-flow plays that can beat 10%? If they keep the money coming, I really don't care about the price increasing.

Risk-adjusted rewards is what it is all about. Don't forget: dry bulk shipping is a highly volatile industry and share prices in the industry are extremely sensitive to changes in day rates. Annual volatility in the main index of spot rates is historically 40+%, far above that of the S&P 500. So while dry bulk has made me a lot of money, there will be a time to get off the bus.

In the meantime, the junk bond market has been selling off, so there are more plausible high yielding opportunities. The equity market has also thrown retail banks and mortgage financiers out the window.

Edit: Hmmm, day rates are now spiking higher and may well hit a new record, so it may be worth holding on a bit longer. We will see...

[Dawg54]

Originally Posted by brewer12345

In the meantime, the junk bond market has been selling off, so there are more plausible high yielding opportunities. The equity market has also thrown retail banks and mortgage financiers out the window.

Throw us a few bones when you move in this direction.

[brewer12345]

Originally Posted by Dawg52

Throw us a few bones when you move in this direction.

To make it real simple, KRE is a retail bank etf that would be ideal for this sort of thing. Other than that, just look at the top 10 mortgage lenders and pick ones that are more-or less pure plays.

[Dawg54]

Originally Posted by brewer12345

To make it real simple, KRE is a retail bank etf that would be ideal for this sort of thing. Other than that, just look at the top 10 mortgage lenders and pick ones that are more-or less pure plays.

I like to keep it simple. The diversification factor makes me sleep better. Looks like KRE is at a 52 weak low and yielding close to 5%. Thanks for the idea.

[brewer12345]

Blew out my EGLE shares at $24.50 and let the options go, too. Too much to resist today. I'm pretty sure I can say that this has been profitable enough that I won't have buyer's remorse, even though I think I can still claim the title of "king of selling too (%&!&$# early."

Of course, the moment they knock the share price down with another secondary offering, yours truly will be panting and drooling to buy stock and/or call options.

[Nords]

Originally Posted by brewer12345

Blew out my EGLE shares at $24.50 and let the options go, too. Too much to resist today. I'm pretty sure I can say that this has been profitable enough that I won't have buyer's remorse, even though I think I can still claim the title of "king of selling too (%&!&$# early."

Hey, for once we both timed it right. I read Fidelity's summary before I saw your post and ended up at $24.58/share.

Remember your agonizing over selling PPD? I wonder what caused this EGLE bump today... Good-news press release leaked to the street that we retail peons won't see until Friday? Index-buying effect of institutional investors mimicking the Russell 3000? Squeeze caused by the shorts covering now that EGLE's part of the index?

Who cares. We were just offered a 5% bonus to sell out.

Originally Posted by brewer12345

Of course, the moment they knock the share price down with another secondary offering, yours truly will be panting and drooling to buy stock and/or call options.

I think I'll pass on that one. In fact my next question is why I'm still holding Diana Shipping, up "only" 3% today and 42% in the three months since purchase.

[brewer12345]

Originally Posted by Nords

I think I'll pass on that one. In fact my next question is why I'm still holding Diana Shipping, up "only" 3% today and 42% in the three months since purchase.

The structure of DSX' charters gives them more upside leverage from rising day rates. Day rates are really going nuts and could well take off into the blue sky, dragging these stocks with them, so I am not quite ready to toss all of these things over the side. EGLE made the regrettable decision to give charterers the option to extend some of their charters at the same rate, so they have modest exposure to skyrocketing day rates. DSX, OTOH, didn't give options away and intentionally set up a chunk of their fleet to be available to re-charter now. Worked out real well, given the huge bump in day rates.

Having said that, I will be seriously thinking about dumping my DSX shares if the stock gets over 26. Can always re-load (likely with call options) when they do the next secondary.

This industry will overbuild, no question. I have enjoyed the ride upward, but I do not want to be holding the bag when supply eventually overwhelms demand.