How Diana Shipping Is Burning Investors

A strong rally in the dry bulk shipping sector over the past several months has led many investors to companies such as Diana Shipping  (NYSE: DSX  ) . 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 Diana Shipping's CEO.

Total fees paid to the CEO's two side businesses, Diana Enterprises and Altair Travel Services, were $5.4 million in 2012, a 68% increase since 2010. This is all occurring while revenues at the company have declined 19% during the same time period. To add fuel to the fire, 2012 executive compensation was $4.4 million in 2012. Long story short: While the shareholders aren't doing so well, the CEO is raking in millions.  

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

1 technology set to change the face of trade worldwide
With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disruptors since the personal computer in "3 Stocks to Own for the New Industrial Revolution." Just click here to learn more.

 


Read/Post Comments (4) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 22, 2013, at 10:15 PM, Hohum777 wrote:

    Hey Blake Bos,

    Do you have any clue what Diana Enterprises does for DSX? Can you name maybe two things the entity does for DSX?

    Hohum

  • Report this Comment On October 23, 2013, at 3:37 PM, TMFBos wrote:

    "...agreement for the provision of brokerage services for a monthly fee of $0.2 million payable quarterly at the beginning of each quarter and with a retroactive effect from March 1, 2013. The new agreement has a term of 13 months until March 31, 2014."

    Basically they serve as the Diana's fleet management company brokering charters for 200k per quarter. Hopefully that helps you out.

    Cheers,

    Blake

  • Report this Comment On October 23, 2013, at 4:26 PM, blesto wrote:
  • Report this Comment On October 25, 2013, at 8:50 PM, Hohum777 wrote:

    Oh Blake, I was already aware of Diana Enterprises' role was for DSX. I was hoping to educate someone who wasn't aware of the Diana Enterprise role. BTW, brokering also includes vessel transactions like sale and purchase. There's other activities.

    Cheers,

    Hohum

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2690183, ~/Articles/ArticleHandler.aspx, 10/22/2014 7:31:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement