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DryShips Shares Plunged: What You Need to Know

By Anders Bylund | More Articles
October 3, 2011 | Comments (3)

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 freight shipper and erstwhile oil driller DryShips (Nasdaq: DRYS  ) fell as much as 14.9% today on slightly above-average volume.

So what: The company doesn't have any news of its own today, but it sits at the nexus of several bad mojo flows:

  • The Athens-based company doesn't like the Greek debt crisis at all, and today was another day of no good news on that front.
  • Other Greek shippers also suffered, including Diana Shipping (NYSE: DSX  ) and Navios Maritime Partners (NYSE: NMM  ) , and the ill will spread across international borders to give New York-based rival Genco Shipping & Trading (NYSE: GNK  ) a double-digit percentage cut.
  • Even the oil-drilling efforts dragged DryShips down as November crude prices sank to $77.80 a barrel.

Now what: DryShips was never a great investment, even when share prices rocketed above $100 three years ago. Management always looked self-serving, and it's hard not to chuckle at the self-inflicted financial damage there as an overly leveraged capital structure falls apart. Unfortunately, many individual investors were caught in this 98% three-year implosion, and I sure hope you weren't among them.

No good can come from this toxic stock, even from these low starting prices. Don't try to catch this falling knife.

Interested in more information about DryShips? Add it to My Watchlist.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. 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 Motley Fool is investors writing for investors.


Comments from our Foolish Readers

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  • Report this Comment On October 03, 2011, at 11:10 PM, 2forward1back wrote:

    you wrote:

    "...No good can come from this toxic stock, even from these low starting prices..."

    Rather harsh and definitive conclusion on your part I think... not even a maybe ?

    I wonder what is your estimate of the 'out of business' sale of all those freight ships and deepwater drillers and other company assets I'm sure are valued at least $ 6.00 perhaps more ?

  • Report this Comment On October 04, 2011, at 3:12 PM, psl8er wrote:

    The dry ship stocks are completely oversold despite demand being up for the large ships and the outlook for Chinese iron ore demand rising by more than 10% year on year.

    It is the tanker market that is in deep trouble as one can see from the other Georgopoulos company Genmar (GMR)which looks like it will have to file Chp 11. On the other hand Genco (GNK) looks well placed to benefit from rising demand in the capesize sector, with no immediate debt issues to deal with. BUY.

    Dryships is confusing investors as it has not yet delivered on its promise to float Ocean Rig and deliver $5+ to the shareholders of DRYS.

    George now seems interested in joining the LNG club so maybe we will see the Oceanrig deal accelerated so he can use that money fro LNG.

    HOLD.

  • Report this Comment On October 04, 2011, at 6:08 PM, Cake123xyz wrote:

    this is coming from someone who cheered on NFLX?

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