However, the company has decided to finally put a portion of their ships on contract at long term rates (at very nice prices) so the volatility should abate just a little as DryShips protects some portion of their fleet from the day to day machinations of the spot pricing.

Now I, in general just prefer to own the physical items these shippers are moving around the world, but there are some interesting developments happening in the sector. First, it takes time - and money to build new ships. One longer term issue I had with this sector (Oct 23: A Near Term Top in Dry Bulk Shippers) is the potential of a flood of new ships coming out in 24-36 months. While some are pointing to the 'credit crisis' as a reason it might be harder to fund new ships, I think this is more of a US/UK issue - there is enough petrodollars out there to finance whatever is needed in this world. But these recent stories about the ever higher steel costs might be a true impediment (May 17: WSJ - Fast Rising Steel Prices Set Back Big Projects). Now on the flip side to that, this is a tricky "reason" to buy companies in this sector because while it might be considered a "pro" for the sector, the same reason would be a "con" for the global economic growth engine, which is what is the underlying story behind these type of stocks. So it's a close call on if this might be a pro or con.

On the other hand, specific to DryShips (DRYS) is a (controversial) initiative to expand into the ultra deep sea drilling business. Myself, I kind of like it - even though it obviously is not their bread and butter. But since I own stocks in that industry and like that industry for the long run - DryShips foray into this area perked my interest up. They have a 75% interest in a Norweigen company, Ocean Rig, with intent to buy the whole darn thing. Per the earnings report

• I am also particularly excited with the implementation of our strategic vision to create a leading presence in the ultra deep water drilling (UDW) market and to take advantage of the extremely positive fundamentals of that sector. The acquisition of Ocean Rig, which already operates two UDW rigs, and the agreement to construct two state of the art drillships create a significant platform for our foray into this sector. As we have mentioned before, we intend to spin off this business unit to our shareholders through a U.S.