Shares of DryShips (NASDAQ:DRYS) soared on Friday and were up 11% at 2:45 p.m. EDT. Driving the move higher was a filing showing that founder and CEO George Economou upped his stake in the company.
Earlier today, DryShips's CEO said that he now owns 69.5% of the company's outstanding shares. That's up from the 53.5% stake he reported in a 13D filing last month. These purchases are all part of the shipping company's recent commitment to curb its dilutive stock sales.
At the end of August, DryShips agreed to terminate a stock sale agreement with a third-party and that Mr. Economou would buy common shares, which he couldn't sell for six months. Under that deal, he pledged to buy $100 million of the company's common stock, while also forfeiting the preferred shares that gave him voting control of the company. DryShips announced these moves in response to investor criticism that management was making a boatload of money while shareholders saw their investment go up in smoke. The CEO's most recent purchase, which is in addition to his $100 million commitment, is giving investors more confidence that the company's focus is on creating value instead of making management rich.
While Economou has been a big buyer of DryShips' stock in recent months, that doesn't necessarily mean he's holding for the long haul since he only needs to refrain from reselling for a six-month period. Because of that, investors need to be careful before climbing aboard since the company has an atrocious history of incinerating capital, which is a something it hasn't yet shown it won't repeat.