Shares of shipping vessel owner DryShips Inc. (NASDAQ:DRYS) jumped as much as 103% on Tuesday after the completed a share offering. The stock gave back some of those gains later in trading but was still up 96.8% at 12:40 p.m. EST.
A $200 million share offering to Kalani Investment Limited has been completed, infusing the company with new cash. In total, 31.8 million shares were sold at an average price of $6.30 per share, which coincidentally is less than today's stock price.
The mystery of the situation is who Kalani Investment Limited is and what it's done with its shares. Nothing significant is known about the company and the agreement to sell shares left the possibility that Kalani just turned around and sold shares on the open market. In fact, that may be a big reason shares are down around 90% in the past month.
There's no reason to think this share offering will do anything to help shareholders long term and it's likely that much of the money will end up in Chairman George Economou's pocket after he agreed to sell as much as $334.0 million of incomplete vessels to the company earlier this month. The series of acquisitions that pay Economou and then dilutive share sales will continue in the long term as well, so today's bounce will likely fade. There's no indication that DryShips will ever be a value-creating company, and this dilutive share sale is one indication why that'll always be the case.