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.

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  • Report this Comment On October 22, 2013, at 10:15 PM, JesuisHoHum47 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?


  • 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.



  • Report this Comment On October 23, 2013, at 4:26 PM, blesto wrote:
  • Report this Comment On October 25, 2013, at 8:50 PM, JesuisHoHum47 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.



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8/29/2016 4:02 PM
DSX $2.33 Up +0.05 +2.19%
Diana Shipping CAPS Rating: ****