Danaos Shares Plunged: What You Need to Know (DAC)

Danaos Shares Plunged: 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 container ship operator Danaos (NYSE: DAC ) sank 10% on Friday on extraordinarily high volume.

So what: At the time of publication, more than 315,000 of Danaos shares have already changed hands, versus its average volume of just 76,000 shares. I can't pinpoint any specific news driving today's sell-off, but when you couple the stock's massive 80% run-up over the past three months with its beta of 1.9, a double-digit drop on a "down" market-day shouldn't come as a huge surprise.

Now what: I wouldn't be so quick to buy into today's sell-off. While its young fleet and strong cash flows are certainly positives, Danaos still sports a rather sobering debt-to-equity of 764%. For investors looking for exposure to the container ship space, less-levered, less-fiery stocks such as Seaspan (NYSE: SSW ) and Global Ship Lease (NYSE: GSL ) just seem like safer bets going forward.

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

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool Options has recommended a written covered strangle position on Seaspan, and the Fool owns shares of it. Try any of our Foolish newsletter services free for 30 days.

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