Dry Ships (92.13) after trading as high as 116 Friday, has fallen 20% in three days, providing a good entry point.
Stock investors can't ever decide if they want to be enamored or afraid of this stock. They'll probably make over $18 this year, but it's not just the dry bulk business that has investors confused. Look at this gem on Fast Money tonight!
Najarian said DryShips (DRYS) and Eagle Bulk Shippers (EGLE) are buys here. He said the Baltic dry shipping rates are increasing.
Macke said he thinks the shippers' pricing model doesn't make sense, because companies like Wal-Mart (WMT) won't be able to buy goods shipped across the globe at exorbitant shipping prices.
Last I checked, Wal-Mart imports toys and items from China-manufactured goods not dry bulk goods! Maybe Macke should just read Wikipedia!
A dry bulk cargo barge is a barge designed to carry freight such as coal, finished steel or its ingredients, grain, sand, or gravel, and similar materials. Barges are constructed of steel.
It isn't Wal-Mart that is affecting DRYS, it's the perception that the market doesn't quite know what to make of DRYS investment in Ocean Rig, a Norwegian deepwater oil drilling company, that will be spun off to shareholders next year.
The hedge funds throw hissy fits, because George Economu runs the company as if it is private, and he couldn't care less (or so it is alleged) about shareholders. Mr. Economu had this to say about shareholders in a Forbes article:
"Who are my investors? Computer models, hedge funds and some institutions that go in and make $10 and get out."
But if you like the odds of more deep sea drilling, and continual high rates on dry bulk shipping, the volatility makes it a great stock to trade!
It should bounce from here.
They've already shaken the crybaby hedge funds out!