Shares in George Economou’s DryShips continue to set new 52-week lows as investors desert the company in big numbers on the back of its recent move into the LPG sector, exercising one of four options to acquire under construction VLGCs previously ordered by Economou’s TMS Cardiff.
Since the beginning of the year, DryShips shares have dropped from $3.73 to close today’s trading at just $2.19 – a far cry from the $102 hit during a spike in November. Shares have plunged around 24% in the last two days alone.
The move into the gas sector appears to be a good deal on the face of it, with the new $85m vessel locked into a five-year charter earning $54m, or better still $92.7m if a further three-year option is taken.
Where investors seem to be taking issue, is with the $200m deal done with Kalani Investments to help finance the promised acquisition spree which CFO Anthony Kandylidis said would make DryShips great again.
Little or nothing is known of Kalani Investments, and the deal where DryShips may sell up to $200m of its common stock to Kalani over a period of 24 months has investors worried that the revenue made from the charters is no match for the dilution of DryShips shares.
DryShips will need to exercise its rights to sell the shares to complete the acquisition of the four VLGCs if it were to push on with its new gas strategy, which comes at a time where dry bulk equities have recorded the largest gains of all the shipping segments over the past month indicating investors feel that it is the sector which stands the best chance of a recovery.
Splash columnist Basil Karatzas commented on shipping stock movements said: “It seems we are looking at the so-called ‘buy the rumors, sell the news’ activity with investors trying to lock in any gains from the rally.”