A strong rally in the dry bulk shipping sector over the past several months has led many investors to companies like Safe Bulkers (NYSE:SB). 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 Safe Bulkers' CEO.

In 2012 alone, the CEO of Safe Bulkers steered $7.7 million from the company's coffers into several companies he owns. But even while Safe Bulkers' revenues decreased by 10% since 2008, payments to the CEO's private businesses have risen by 80% during the same period. This is just one such sign of worry behind related-party transactions at the company.

In the video below, Motley Fool analyst Blake Bos explains exactly what a related-party transaction is, what kinds of transactions are taking place at Safe Bulkers, and whether investors should care about them.


Blake Bos has no position in any stocks mentioned, and neither does The Motley Fool. 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.