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 Star Bulk Carriers (NASDAQ: SBLK ) advanced as much as 5% on Friday following a positive interview with CEO Spyros Capralos. This adds to the positive industry outlook voiced by DryShips (NASDAQ: DRYS ) CEO George Economou who was also interviewed earlier this week.
So what: In the interview, Capralos pointed out a lot of metrics that have improved specifically in Star Bulk Carriers' favor. Operating expenses are 20% below 2009 levels, its general and administrative expenses are close to 2010 levels, and the fleet under management has tripled since that time.
On the revenue side, Capralos said, "Given our bullish view on the freight market, these strategies are primarily spot oriented." This is a similar strategy that DryShips is moving toward, rather than fixed rate long-term contracts.
Now what: Currently, Star Bulk Carriers has more than 50% of its operating days available to earn based on the fluctuating daily spot prices and has the overwhelming majority of 2015 wide open. Capralos agrees with DryShips and believes the rate environment for the industry still has a long ways to go.
Star Bulks Carriers currently has on order 11 new vessels for deliveries in 2015 and 2016 that were purchased "at historically low prices" which "substantially lowers the risk of such an investment." Capralos put it well when he said, "The further we expand this business, the more we profit as the associated costs do not expand linearly." In other words there are economies of scale with a large fleet that is able to absorb the overheard better, on a per ship basis.
The details from this interview, coupled with Economou of DryShips calling for a red hot shipping market this year and an explosion next year, helped send Star Bulk Carriers higher.
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