GNK @ $11.70
DRYS @ $11.08
EGLE @ $6.97
EXM @ $8.42
Major shippers like GNK and DRYS have made good decisions to cancel orders for new vessels. This is a prudent move as it will allow them to maintain liquidity and purchase distressed assets when the opportunity arises. Look for others to do accordingly. It will also allow them to keep paying dividends, especially GNK, whose $1.00 / share/ Qtr dividend is looking more secure. A 30% plus yield ain’t so bad.
We all know what has happend to the Baltic Dry Index (BDI) since hitting an all-time high of 11,793 last May. Recently, it hit 663, which it hasn’t seen in over 22 years.
This shippers have been due for a bounce, which could help investors recover two-thirds of their losses in these stocks, via the magic of Fibonacci.
The bounce could be huge, taking the BDI back up over the 5,000 level or higher. Shippers are moving freight at cash-flow breakeven. It would be unlikely that the day rates will go much below where they are now, unless operating costs fall or shippers like losing money. So, we may have seen the bottom in prices.
Excess capacity may start to get used up after the U.S. / China decision last week to allocate $20 billion to help ease the credit logjam in trade/shipping finance.
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