Investors Need Answers to These Questions on DryShips, Inc.'s Conference Call

All dry shipping investors should listen live to CEO George Economou and the DryShips team speak on Friday.

May 20, 2014 at 12:10PM

Although I don't always agree with everything DryShips (NASDAQ:DRYS) and its CEO George Economou have to say, their conference calls are full of industry insight. With that in mind, there are a number of key things to listen for and, if you're able to do so, a number of key questions you may want to consider asking. DryShips reports its earnings after hours on Thursday, May 22, followed by the call at 9:00 a.m. EST the next morning.

Previous call
The last DryShips conference call took place in February. The overwhelming theme of the call was to expect global daily dry shipping spot rates to have a "sustainable recovery" in 2014 and beyond. Iron ore and coal exports were "factors that can really set the markets on fire." In addition to worldwide expansion of demand, DryShips listed a number of things that should reduce the availability of world supply, such as slow steam of ships, port congestion, the slowing rate of new orders, and the considerable "scrapping potential" of old ships.

DryShips' strategy was to take advantage of the anticipated strength to come in daily spot shipping rates by letting long-term, fixed-rate contracts expire and letting its fleet operate based on floating daily rates. Also, DryShips has debt amortization schedules for which it is hoping to score leniency in the form of rescheduling from the debt holders.

Questions for DryShips
1. Is there any update that management can share aboutthe debt negotiations? Genco Shipping & Trading has recently filed for bankruptcy restructuring due to failed negotiations, which makes one wonder if DryShips will be any more successful. While DryShips has much larger collateral, namely 78.3 million shares of Ocean Rig UDW, giving these shares up to creditors would mean potentially giving up majority control of Ocean Rig UDW, which doesn't seem to be in DryShips' interest. DryShips' annual report specifically warns that if low charter rates continue as they are or decline further, then lenders may cease being cooperative. Charter rates have gotten worse over the last couple of months, so how are the lenders feeling now?

2. Back in March, Economou said that it is "time to celebrate after a six year downturn in the shipping markets" at the end of an interview. At the time, he also predicted a "hot" freight market over the next three months; instead, it has crashed. What happened? Has the party simply been delayed or does DryShips have a new outlook?

3. Does DryShips still expect an expansion in iron ore mining around the world to lead the dry shipping market into calmer seas? What details does the company see now and in the medium-term future regarding China and iron ore? Which details have the company worried?

4. What is DryShips seeing on the supply side? It seems like the two most important factors are the delivery of new ships adding to supply and the demolition of old ships being removed from total supply. There has been talk by all sorts of experts, analysts, and executives of an overdue mass exodus of ships that have completed their useful lives and are headed to the scrapyard. What is DryShips' stance on why retiring ships is taking so long, and does it have an updated forecast about replacing older vessels?

Bonus question
Any comments from Economou or anybody else at DryShips regarding the megamillions of dollars in related transaction fees, commissions, and other payments to companies owned by Economou himself? Don't expect anybody to ask about these related party transactions, or for a straight answer to be given if the question is raised, but it's worth a shot.

It will be interesting to see which of these questions happen to be addressed, and what the answers are. For speculators with a strong stomach, it should be wild ride either way. As for me, I'll be sitting this one out on shore. I too easily get seasick.

You don't want to miss this
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And everyone from BMW, to Nike, to the U.S. Air Force is already using it every day. Watch The Motley Fool's shocking video presentation today to discover the garage gadget that's putting an end to the Made In China era... and learn the investing strategy we've used to double our money on these 3 stocks. Click here to watch now!

Nickey Friedman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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 has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information