Coulda… Woulda… Shoulda – DryShips (DRYS)
Posted on Wednesday, January 28th, 2009 | In Market CommentaryI wrote earlier today I was shaking my head watching this commodity rally take place based on good bank/bad bank. Financials? Ok I get it… commodities? Huh!
Not even a week after DryShips (DRYS) tells people “we’re in trouble” [Jan 22: DryShips (DRYS) - Reality Strikes Back] the traders with their memories with a half life of a fruit fly already were driving the stock back up. Fundamentals don’t matter. Until they do.
- DryShips Inc (DRYS) said two of its banks notified the Greek dry bulk carrier that it is in breach of certain financial covenants and it is currently in discussions with its lenders for waivers and amendments to loan covenants.
- Shares of the company fell 15 percent to $10.39 in trading after the bell.
- “Two of our leading banks, which collectively held $751.8 million of our indebtedness as of December 31, 2008, have notified us that we are in breach of certain financial covenants contained in our loan agreements,” DryShips said in a filing with the U.S. Securities and Exchange Commission.
- The company added that it is in talks with another lender that currently holds $650 million of its debt regarding breach of loan covenants.
Coulda… woulda… shoulda… I was hoping to see the stock pop up tomorrow AM on “happy bank times are here again” so I could short it nearer to $14 (red line). Looks like that won’t happen.
I am shocked the stock is only down 15% after hours as “broken covenants” have led to straight shots down to $1 land for many companies in other sectors. I guess the hope is these loans are renegotiated. If these banks don’t bend, DryShips is going to be suffering a lot more than 15%. Maybe Greek Shipping is “too big too fail” in the mother land and they’ll get a federal bailout.
Damn facts – keep getting in the way of a good daytrade.
No position
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dry bulk carrier;, DryShips Inc.;, Fund my Mutual Fund, good bank/bad bank;, Greek Shipping;, happy bank times;, Market Commentary, U.S. Securities and Exchange Commission, USD
 About Trader Mark (http://fundmyfund.blogspot.com)
Mark is a self taught private investor, fascinated by the market since an early age, discovering mutual funds as a teenager in the 80s, and then moving to equities by the mid 90s. His equity focus is identifying secular growth trends, and the companies most likely to benefit from these macro trends. Stocks are identified through fundamental analysis, although basic technical analysis is used in determining entry and exit points. With a degree in Economics from the University of Michigan, a broader understanding of the economy as a whole, along with interpreting investor psychology is also a major interest for Mark. His career background has focused on financial analysis in corporate America. |
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