Once More, With Feeling

[brewer12345]

DSX just announced yet another secondary offering, which will pay down debt and fund the delivery of their new ship to be delivered in November. Their secondary offerings have historically been extremely attractive buying opportunities. If you had bought on the day they announced the deal price on each of the last few secondaries, you were making nice money within 3 months.

Hopefully the deal will price no higher than 25. With any luck, we will be looking at a number below that. Last secondary took 10 days between when they announced and when it priced.

 

[twaddle]

So, are you going to buy calls or the shares? I'm thinking this time I'll shoot for a Taleb-style doubling instead of a lousy 20%. Man, it feels like 1999 again!

 

[brewer12345]

Haven't decided yet, and it depends on pricing. I'd jump on options, but they have gotten quite expensive. I'll probably do a combination of buying calls, selling puts, and maybe buying some stock.

 

[Dawg52]

Stock has dropped to 25.23. Market already factored in today's news?

 

[twaddle]

The market factors in the news faster than you can click the buy or sell button.

 

[brewer12345]

Dunno. If sleazeballs are front-running and shorting the stock in anticipation of getting shares in the secondary (illegal, but commonplace), we could well see further drops. Or maybe not. I think getting the secondary off at 25 would be an accomplishment. Prolly see 23 or 24 before its over, though.

Having said that, selling now is foolish. Stock will snap back shortly after the secondary is done.

 

[Nords]

If you had bought on the day they announced the deal price on each of the last few secondaries, you were making nice money within 3 months.

I backed up the truck on the 29 March secondary ($17/share) and snorkeled up more on the open market for $17.40 to make DSX 2% of our ER portfolio. Collected a dividend payment and sold on 11 July at $25.45/share... minus short-term cap gains taxes.

No complaints, but I'd be surprised if we see a repeat of that magnitude. I'm out.

 

[brewer12345]

I backed up the truck on the 29 March secondary ($17/share) and snorkeled up more on the open market for $17.40 to make DSX 2% of our ER portfolio. Collected a dividend payment and sold on 11 July at $25.45/share... minus short-term cap gains taxes.

No complaints, but I'd be surprised if we see a repeat of that magnitude. I'm out.

How about this: if DSX rolls over its charters at anything like market rates when they come due in the next 6 months, I think the dividend will cruise to an annual level of $3 a share. I think that will attract some buying interest as it becomes clear.

The question of how quick the upside happens is also one of the reasons I am less enthusiastic about the pricy calls. Buying equity and selling puts seems more attractive.

 

[Nords]

How about this: if DSX rolls over its charters at anything like market rates when they come due in the next 6 months, I think the dividend will cruise to an annual level of $3 a share. I think that will attract some buying interest as it becomes clear.

I agree, and the volatility will be impressive. It might even affect my sleep.

The question of how quick the upside happens is also one of the reasons I am less enthusiastic about the pricy calls. Buying equity and selling puts seems more attractive.

That's the problem. DSX at $17 had some things that could go wrong and many things that could go right. DSX at $23 has more thnigs that could go wrong and fewer things that could go right. DSX at $28?

I think the profits will go to the attentive, nimble, leveraged investors, bless them! They'll earn everything they keep.

 

[brewer12345]

That's the problem. DSX at $17 had some things that could go wrong and many things that could go right. DSX at $23 has more thnigs that could go wrong and fewer things that could go right. DSX at $28?

Hmm, well, I estimate break-up value pro forma for the offering at $23 a share or so. I am comfy buying this thing at break-up value. I think NM is much cheaper (break-up at least $15/share, cash on B/S, lots of nice assets they can use), but DSX is simple, spews cash, and offers trading opportunities at every secondary.

Different strokes.

 

[Nords]

I am comfy buying this thing at break-up value. ... but DSX is simple, spews cash, and offers trading opportunities at every secondary.
Different strokes.

You'll make outsize profits at this sort of investment because you're willing to invest the time & effort to learn the skills, analyze the situation, & track the risks. You'll also significantly move up the date of your ER, so a few hours' effort now will save you months or even years on the back end. Given your skills & motivation (to say nothing of the Bloomberg terminal), this is what you have to do!

I haven't exactly moved on but I'm on the sidelines. My loss aversion still exists but I've lost my profit motive.

 

[brewer12345]

You'll make outsize profits at this sort of investment because you're willing to invest the time & effort to learn the skills, analyze the situation, & track the risks. You'll also significantly move up the date of your ER, so a few hours' effort now will save you months or even years on the back end. Given your skills & motivation (to say nothing of the Bloomberg terminal), this is what you have to do!

I haven't exactly moved on but I'm on the sidelines. My loss aversion still exists but I've lost my profit motive.

Hey, I am still trying to make my bones, whereas all you have to do is make sure you don't manage to screw things up too badly. Were I in your shoes, I would stick with my measly 500 shares of DSX that I already have and move on. But I am not, so an extra points of return a year shaves a lot of time at the salt mines.

 

[vvsonikvv]

I got in at $19.28 and $20.60 and sold at $26.91 and $27.69...

I had a limit order of $24.93 that went through today. I'm already up a percent or two. The dividends by themselves look nice.

I wonder what to do next... (and when)

 

[brewer12345]

Secondary priced at $25. I will be writing Dec. 25 puts. Might buy a few shares. Would love to get some March 25 calls, but they are probably too expensive. Maybe pick up a few March 30, depending on the price.

 

[Gumby]

Interesting that DSX is up over $26 today with a very large secondary announced at $25. I would like to get in and think that maybe there will be a dip on the day of actual share distribution. Any knowledge on when that might be? (or an opinion as to whether my theory is right)

 

[brewer12345]

Interesting that DSX is up over $26 today with a very large secondary announced at $25. I would like to get in and think that maybe there will be a dip on the day of actual share distribution. Any knowledge on when that might be? (or an opinion as to whether my theory is right)

I didn't do anything with DSX today since it went nuts right away. We may get a dip, but I suspect not. Day rates are going ballistic and the entire industry is speaking at an analyst conference next week, which will garner DSX and its peers more attention.

Oh well. Up to my ears in this stuff already, so no big deal to miss this one.

 

[brewer12345]

I chose to stand aside and rise what I already had, but anybody with the gumption to pay up on the day the deal was priced has profited handsomely. Next stop, 35.

 

[Gumby]

I also stood aside. There was a slight dip on the distribution date, but not enough for me. I will have to console myself with my gains in EGLE (and my NAT position has not done all that badly either).

 

[Dawg52]

I chose to stand aside and rise what I already had, but anybody with the gumption to pay up on the day the deal was priced has profited handsomely. Next stop, 35.

I waited as well. Oh well.........maybe next time. Where do you think NM is headed? I own a little of this.

 

[brewer12345]

I waited as well. Oh well.........maybe next time. Where do you think NM is headed? I own a little of this.

I think NM is worth 20, possibly more over time.

 

[Dawg52]

I think NM is worth 20, possibly more over time.

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