DryShips Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of dry-bulk shipper DryShips (Nasdaq: DRYS  ) surged 10% in early Friday trading on news that its Ocean Rig UDW subsidiary will raise about $500 million in a private stock offering to finance the building of new drillships.

So what: It's no secret that DryShips is infamous for value-hurting stock sales, so today's seemingly non-dilutive move is a welcome surprise to Mr. Market. For the $500 million, DryShips reduced its ownership in Ocean Rig by only about a fifth, maintaining a 70%-80% stake in the unit.

Now what: I'd be cautious about jumping into the stock at this point. With this double-digit rally, DryShips is now up roughly 40% over the past month alone. While today's capital raise, along with recently improving profits and margins, are certainly positives for DryShips, the likes of Navios Maritime (NYSE: NM  ) and Genco Shipping (NYSE: GNK  ) -- whose shares are both down 10% over the past month -- represent safer bets for my money.

Interested in more info on DryShips? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

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  • Report this Comment On December 03, 2010, at 12:58 PM, dickyruu wrote:

    Is there not a way in the world you guys can be positive? So DRYS makes a move and negative analyst from you guys slams public opinion. If you want this country to survive endeavor to increase public opinion.. give us a break for once it's close to Christmas.

  • Report this Comment On December 04, 2010, at 8:31 AM, shippingscam wrote:

    Mr. Pacampara,

    You keep on blastinbg DRYS and you are promoting overleveraged companies like NM that should be under investigation by the SEC for inflating balance sheet by selling overpriced assets to own controlled company and essentially defrauding investors.

  • Report this Comment On December 05, 2010, at 5:48 PM, Teacherman1 wrote:

    Thanks for the article Brian. Wanted you to have at least one post from someone who was not hiding behind a CAPS page that was obviously opened just to take "shots" at your articles.

    Did want to mention that "George of the Dry Ships" did recently take a significant position in DAC. Don't know if it means anything, but just thought I would mention it in case you missed it.

    I still like NM for the longer haul, but got out for awhile to focus on AXAS, LYG, and "speculative banks.

    Am going back into Dry Bulk more heavily when we get a bigger dip. Am now in "lightly" in ESEA, and a larger, but sill relatively modest position in DAC, GMR, and KSP. Like the price they got down to.

    Will probably also pick up some EXM, EGLE, and SBLK.

    Longer term, I like Oil and Gas. Either E & P companies and discounts, or related services.

    Also like discounted banks.

    Have a good weekend, or at least what's left of it.

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10/21/2016 3:59 PM
DRYS $0.36 Down -0.03 -7.23%
DryShips CAPS Rating: **
GNK $5.39 Up +0.13 +2.47%
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NM $1.18 Down +0.00 +0.00%
Navios Maritime Ho… CAPS Rating: ***