DryShips Inc. DRYS 2.66% shares have once again caught fire as one of the most volatile names in the market over the past year is on the move once again. This time, DryShip stock is up 55 percent in five days.
These types of moves have become par for the DryShips course in recent months. DryShips has had a series of massive rallies and sell-offs, none more dramatic than its 2,500 percent rally in two weeks back in November 2016.
Historic Dilution
While some traders believe the recent 55-percent gain just the latest in a series of spikes and crashed for DryShips, other analysts argue that DryShips has completed its aggressive, dilutive spending spree and is finally free to trade on the strength (or lack thereof) of its fundamental picture.
In recent years, DryShips has undergone a series of reverse stock splits in an effort to maintain the $1 minimum listing price on the Nasdaq and raise funding. All together a single share of DryShips today would have represented 11.6 million shares of stock prior to the splits. Adjusted for the splits, DryShips’ share price is down more than 99.9 percent in the past 12 months.
Recklessness Vs. Opportunism
DryShips management was selling shares hand over fist to raise $720 million in equity to purchase 17 new ships for its fleet. It didn’t help that much of the new equity came from an entity called Kalani Investments, about which little information was know.
Forbes contributor Jim Collins now says that DryShip’s current fleet puts its net asset value at above $8 per share, well above its current share price of under $5 per share.
DryShips A Long-Term Play?
If Collins’ calculations are correct, there’s nothing stopping a further rally in DryShips shares other than market skepticism of company management or a breakdown in shipping market fundamentals.
At this point, it’s hard to fault investors for their skepticism. The company has rewarded patient investors with 99.9 percent dilution, and SEC investigation and a series of investor lawsuits. DryShips may be undervalued, but at this point it’s undervalued…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
