At today's price pushing $21/share, it's going to be hard to price it at $17 again.
Brewer, here's another version of the "when to sell" problem. It's pretty easy to see the value in something like DSX at $10/share. It's not so difficult to see it at $17/share. But when do you stop raising your basis through buying additional shares? Is a $19/share tertiary offering really the best use of our uninvested cash?
Another aspect of the issue is reinvested dividends. Admittedly they're a fraction of the original purchase and they don't raise the cost basis by much, but at some point it makes more sense to stop compounding and just run away with the profits. The trouble is identifying that point.
I have a valuation in mind for DSX where I would start unloading (over $25, more if day rates do what I think they will do), so I do have a firm sell target on this one. The industry is volatile enough that buying and forgetting about it forever is probably not a great idea.
Just a guess, but if Palios and Fortis decide to pound ot another 8MM shares and DSX sells 2+MM to finance the November delivery, I would expect the offering to price somewhere around $19.
These guys have done so many offerings that I could have dumped my entire net worth into the company by now (and made a huge sum). Since I already own other companies in the industry, I do not wish to get overweighted. So I maintain a more-or-less permanent position of 1500 shares (500 bought at 10, 1000 bought at 15 and change). But every time DSX sells off too much (as in late Feb) or does an offering, I take advantage of it. The day the offering prices, I buy a wad of somewhat out of the money calls with the longest expiration date I can find. I then sell the calls within a month or two, usually at an obscene profit.
Example:
About the time DSX did the last offering at 19, I bought 60 contracts (aka 6000 shares worth) of September 20 calls for 80 cents a pop. Within a month or so, I sold them for $3 a pop.
I do the same thing every time EGLE does another offering.
FWIW, I think the marginal buyer of DSX is an uneducated retail rube. They have little or no clue about what they bought, how the industry works, or how things are going in the business. They trade on fear and greed. The only real concrete signs they have as to how things are going are 1) what spot rates do (which is mostly irrelevant to DSX) and 2) the amount of the dividend. I think #2 is far more important to our rubes. So just about every time DSX declares a dividend, they market reacts a lot in the short term. I project DSX bumping the dividend up to at least 60 cents a quarter ove the next 6 months, so I am pretty sure that our rubes will see the next divs (maybe 54 cents and then 60 cents) and react as they always do. If spot day rates take off again, extra gasoline will be poured on the flames.
Can't help you on the reinvested dividends. I only do them on a few selected issues.
Edit: Boy, does that sound cynical. Oh well. I take it as I find it.