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How Safe Bulkers Inc. Is Taking Advantage of Investors

A strong rally in the dry bulk shipping sector over the past several months has led many investors to companies like Safe Bulkers  (NYSE: SB  ) . But before you hop on board, don't ignore one very big warning sign. Several related-party transactions are funneling millions of shareholder dollars into businesses privately owned by Safe Bulkers' CEO.

In 2012 alone, the CEO of Safe Bulkers steered $7.7 million from the company's coffers into several companies he owns. But even while Safe Bulkers' revenues decreased by 10% since 2008, payments to the CEO's private businesses have risen by 80% during the same period. This is just one such sign of worry behind related-party transactions at the company.

In the video below, Motley Fool analyst Blake Bos explains exactly what a related-party transaction is, what kinds of transactions are taking place at Safe Bulkers, and whether investors should care about them.

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  • Report this Comment On November 20, 2013, at 12:32 PM, fishers2tall wrote:

    Safe Bulkers has no employees other than the owner so virtually everything the company does from bookkeeping to ship repair is done by outside companies. Could it be that some of these companies are owned by the Safe Bulkers CEO. Why is this automatically bad? You mention that revenue went down 10% since 2008. The spot market charter rates went down over 50% in the same time period. I would say that a decrease of only 10% was pretty good considering the world economic environment due to a rather severe US recession. I would like to hear what the related party transactions amounted to. Were the related party transactions related to the shipping business?

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9/29/2016 9:45 AM
SB $1.53 Up +0.02 +1.32%
Safe Bulkers CAPS Rating: ****