DryShips (DRYS) Gets Concern Note From Auditors; Manitowec (MTW)
This is an ironic story because in the comments section last week, reader Keith P asked why I trade in Excel Maritime (EXM) rather than everyone's favorite dry bulk shipper - DryShips (DRYS). Today's news which has been a long time coming explains why. (
Oct 31, 2008: Credit Tsunami Swamps Trade) (
Nov 3, 2008: UK Telegraph - Investors Shun Greek Debt as Shipping Crisis Deepens) While DryShips is the daytraders / speculators favorite stock it is not for me, or my timeframe - not with the potential to wake up any morning and seeing banks pulling the plug.
Back in January we posted how DryShips was breaching covenants and in talks with another bank about more covenants to be broken
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.
The company added that it is in talks with another lender that currently holds $650 million of its debt regarding breach of loan covenants.
Speculators seem to ignore these things and as long as it is hot money they like to play... which makes it difficult to short because this type of stock moves 20% in any random direction based on which way the wind is blowing.
Now again, we are in an era where individual stocks mean very little and sectors trade together - the tarnish of one stock stinks up the entire sector. That is illogical on many fronts but it is what it is. Other stocks in dry bulk are being hammered today ... even those that have no covenant issues.
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