David White

Total Rating:
+1 / -1

431 Comments

    • Tue Jun 24th 12:55 PM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      I should point out that shippers are much more like trains than planes. They are a slower, but cheaper and more energy efficient way to transport huge heavy loads between countries separated by water. There is no real substitute. You have seen how well railroad stocks have done in the last year. Shippers are really in close to the same boat. They just don't have quite as much monopoly power as the railroads. After all, who can get the real estate to build more tracks? It would be virtually impossible for some of the long term tracks. The only real possibility would be to build new track next to the old ones on land the railroads already own. I have delineated some of the shippers' barriers to entry above.
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    • Tue Jun 24th 12:19 PM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      DRYS has a Beta of 3.0 and NM has a Beta of 1.8, so you can see they will likely explode if the market goes up. They are clearly positioned to do just that. If the market goes down, they will likely follow it, although reluctantly. To me this seems like a good risk/reward. I am hoping the market is about to rebound. What the Fed says tomorrow may impact that significantly.
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    • Tue Jun 24th 11:51 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      Further because the credit is so tight currently, it is barring most new entry into the shipping arena. This gives shippers good pricing power. Specifically both the buyers and the ship builders are having trouble getting the necessary credit to build new ships. Further the new ships have gone up in price (the steel for instance costs a lot more) dramatically in the last few years. This means that the current players in the market have a huge margin advantage over any new entries. This is another barrier to entry. Further companies such as NM have options to buy many of the ships in their "chartered in" fleets. These options are for the much lower ship prices. I believe NM is currently trading for less than 2 times book value, and it has a greater than 50% ROI. DRYS also has a greater than 50% ROI. New entries into the market will have a hard time matching these numbers.
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    • Tue Jun 24th 11:33 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      bill921: There is the fear that shippers will become like the arilines (i.e. less profitable with higher fuel costs). However, the prices of all commodities have been going up dramatically. Shipping prices are able to follow in line. The 200 day moving average on DRYS is still upward. In fact if you look at the chart, it looks like DRYS is at the bottom of a recent pullback. If the markets tank considerably from here. The bottom will likely be lower. If the markets start going up from here, DRYS is primed to at the very least reach its more recent highs of $95 and $110 approximately. It was even higher last year. Unless you are predicting a global recession, all of the hot economies will have to do a lot of shipping. It looks so far like the shipping costs can escalate with the commodity costs. DRYS has been doing mostly short term contracts, so it should not be very exposed to longer term movements in the price of fuel. DSX (longer term contracts) might be one to worry about, although I am not sure that fuel costs variances are not built into their contracts. You will have to look that up.
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    • Tue Jun 24th 11:23 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      billf921: I think the Drys also now has at least two more deep sea drilling rigs due for delivery in the next 1-2 years. These should add demonstrably to the bottom line. This area is so hot, you cannot get these rigs. I think the buy of this company was a fantastic purchase.
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    • Tue Jun 24th 11:15 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      RS also just raised its profit estimate for the 2Q significantly due to higher steel prices. If China is going to use the iron ore to manufacture steel for its infrastructure needs, this should be another spur to prod them into quickly resuming iron ore importation. It doesn't look like prices in this area are going lower in the near future. After the Olympic build out and the earthquake recovery, this may change a little. However, China still has a quickly growing economy. They will still need to import a lot of raw materials.
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    • Tue Jun 24th 10:40 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      The DJIA is currently at a longer term support level. If we have any luck, the markets will bounce up from here.
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    • Tue Jun 24th 10:37 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      NM just announced that it has agreed to acquire two new Ultra Handymax ships. If the shipping market were going south, the people who know most about it would likely not be investing more money in new ships. They obviously have the opposite viewpoint.
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    • Tue Jun 24th 10:32 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      I should add SBLK has a mean analyst rating of 1.7.
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    • Tue Jun 24th 10:25 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      I should further point out that China is also short of coal at the moment. The above contract settlement (and the hopefully the soon to be done BHP one) may well act as a trigger to new contracts for shipping for coal importation. China defintinitely needs both of these materials for the Olympic build up and for earthquake recovery. Coal prices are currently much higher than 1 year ago. This may be part of the reason for the slowdown in coal importation by China recently. Still it looks like they simply have to have it, so I am expecting more shipping in this area too (very soon).
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    • Tue Jun 24th 10:14 AM | Rating: 0 0
      Commented on:
      Good News For Dry Bulk Shipping
      hannahoo7: as it so happens a lot of these stocks are listed as good buys by professional analysts. NM has an mean analyst recommendation of 1.8 on Yahoo Finance today. DRYS is listed as a buy by the Street.Com, a strong buy by Ford Equity Research, Long by Market Watch (short term), and a buy by Jaywalk Consensus. I have since bought some options on one of these stocks. I think it has the potential for a good return. The news cited should make the stocks move higher. However, these stocks do tend to be market dependent. If the market goes down dramatically, they are likely to follow, even if the dry bulk situation is improving. The market news last week was extremely bad. There was the Israeli preparation for an attack on Iran. There was the midwest flooding. The Chinese earthquake wasn't too long ago. There was more bad banking news, although GS and MS did better than expected. There are the current California fires. Nigerian oil production has effectively shut down due to rebel attacks. Basically there are a lot of negatives which have driven the market down. If there are no big huge negatives in the market this week, I am expecting a bit of a recovery. This should allow the shipping stocks to move up on the above cited good news. Plus BHP is expected to conclude its negotiations in the very near future. I am guessing within the next 2-3 weeks. These negotiations are often completed by April, so they are already significantly late for this year. This should be further fuel to add to the uptrend. If you look at the charts for these stocks, you also see good technical support at their current levels, so one would expect movement upward soon. DRYS for example is just above its still rising 200 day moving average. One would expect a move upward from here on good news, such as that listed above. Further DRYS has recently become a player in the deep sea drilling arena. This sector has recently been upgraded by analysts (GS among others). DRYS price might benefit to some degree from the momentum in this area. NM was recently hit with disappointing earnings news. It is oversold. The mean recommendation of 1.8 by analysts would tend to make me think they agree with this assessment. Further NM has recently acquired a whole new fleet of small ships in South America. These are slated to begin adding very positively to the bottom line of NM in Q4 of this year. NM should really move up from where it is. Apparently Cramer disagrees with the analysts. Still NM does look like a fundamentally sound stock with excellent upside potential. EXM looks like it should also move up from its 200 day moving average. TBSI has recently announced the acquisitions of 4 ships. This will likely positively effect its bottom line in the near future. It is normally taken as a positive sign. Its mean analyst recommendation is 2.0 (a buy). Still this movement will likely be market dependent as I have said. If you think the markets are going to tank, you may wish to wait to buy. If you think this is just a pump and dump scheme, I think you probably don't know much about Dry Bulk Shipping. Still if that is what you believe, you should just stay away from these stocks.
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    • Mon Jun 23rd 02:05 AM | Rating: 0 0
      Commented on:
      These Three Deep Sea Drillers Look Like a Bargain
      I should point out definite, "extraordinary&qu... reasons for the markets' downward movement at this time:
      1) The Israeli's are practicing taking out Iranian nuclear development capabilities (i.e. perhaps about to start a war with Iran).
      2) The Nigerian Oil production has been virtually shut down due to attacks by rebels.
      3) The Midwestern U.S. has suffered catastrophic flooding recently with multi billion dollar damages to property and crops. I am not sure what the total figure is at this moment, but it is very significant. Many people are saying they will be permanently moving out of the areas involved.
      4) Many western states are experiencing significant wildfire problems, which only look like they will get worse as the summer goes on.
      5) The Fed now feels it must soon start to raise rates in order to fight inflation.
      6) There is fresh news of bad loans form many of the banks, including regional banks. GS estimated banks will have to raise another $65 billion in capital to cover their losses. Many banks are laying off workers. Commercial real estate credit is very tight. The banks are decreasing their leverage, which in one sense is good. They are opting for a safer strategy. However, this also means there is the decreased leverage multiple times less credit available. This is puting a strain on other things, such as commercial real estate.
      7) Let's not ignore the 8.0 or so earthquake in China, which has had a significant effect on China's economy. This has rippled into U.S. and other markets.
      8) The price of oil has risen 30+% since the beginning of the year. Many other commodities have risen significantly also.
      9) The U.S. Dollar fall has exacerbated the commodities' increases. It has also destabilized the markets to some extent. Hopefully it is near its bottom. If so, this should help to stabilize the markets.
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    • Sun Jun 22nd 22:09 PM | Rating: 0 0
      Commented on:
      These Three Deep Sea Drillers Look Like a Bargain
      There is fairly strong support for the S&P500 at 1250. Perhaps the market will reverse before that? Or perhaps it will not stop at 1250 this time, as now the Fed is threatening to raise rates as opposed to cutting them? I have somehow lost my crystal ball.

      As for RIG, it is still looking like it wants to break out to the high side. It appears as if the current market downtrend has prevented it from doing so to any great extent. When the market turns upward (or perhaps even when it stabilizes), RIG should be a leader in the move upward.
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    • Sun Jun 22nd 21:46 PM | Rating: 0 0
      Commented on:
      These Three Deep Sea Drillers Look Like a Bargain
      oldgoldbug: It wasn't me who said that. It was Davo. It is news to me. However, I am not surprised to hear that people are going to cash as the market declines. That is the normal reaction. Also there is the thought that there may be a second round to the credit crisis in which a number of businesses get hit. People in commercial reall estate are now telling me that credit is extremely hard to get for commercial right now. If some people have to sell, this could mean they may have to sell at firesale prices. Still many others (including our former Fed Chairman, Alan Greenspan) are saying that the crisis is mostly over. Perhaps a short commercial real estate crisis will be the end of it??? Perhaps the rising oil prices will bring on a global recession??? I think there is a risk of both of these things happening. There is also the possibility that we have already seen the worst. We may get a recovery later this year??? Perhaps mangers are converting to cash because they cannot predict what will happen. They can always buy back when the market starts to go up.
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    • Fri Jun 20th 03:06 AM | Rating: 0 0
      Commented on:
      These Three Deep Sea Drillers Look Like a Bargain
      I heard an alternate thesis about the effect of the Chinese government raising the internal fuel prices. This analyst thought that the increased price might allow the Chinese government to make the supplies more plentiful. This might cause gasoline usage, etc. to go up. Apparently with the old price scheme you could not always get all the gasoline you wanted. I personally thought this idea had some merit. For the moment I am now thinking that the Chinese price increases are going to be a wash as far as demand goes. Some people will use more because they will now be more easily able to. Some people will use a little less because it is more expensive. Overall China will still eventually use more. That is a virtual certainty as long as their economy continues to grow quickly.
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