DryShips (DRYS) along with
LDK Solar (LDK) are probably the 2 most "controversial" companies we've owned - well maybe along with
Crocs (CROX) was well. Of the 3, we only own
DryShips (DRYS) as of today, and
earlier this week the company reported yet another stellar quarter.
There are a lot of moving parts, but essentially the company reported $4.13 (vs analysts $4.05). This industry is essentially the companies that move grains, fertilizers, coal from one continent to another. Contracts are either longer term in nature or on the "spot market" (what the current market will bear). There are a horde of stocks in this sector, all with different ratios of long term contracts versus spot contracts.
DryShips is far and away the most levered to spot pricing, which in times when the spot prices go up - is a great thing; but in times when spot pricing falls, is not a great thing. Below is the chart of the
Baltic Dry Index which shows you the enormous volatility in spot rates.
If you isolated just on the past 18 months or so of the above chart, it would look a lot like the stock chart for
DryShips (DRYS) - 1 year chart below
So obviously this is not a stock for feint of heart.
