$DRYS: DryShips: Sympathy For The Devil Feb.21.
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Posted On: 02/21/2017 6:39:00 AM
$DRYS: DryShips: Sympathy For The Devil
Feb.21.17 | About: DryShips Inc. (DRYS) Get Alerts
Value, special situations, energy, commodities, shipping, long only
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Summary
DryShips Inc. announced on February 17th that it had filed a Prospectus Supplement for the issuance of $200 million of common stock through (not to) Kalani Investments.
The Supplement enables DryShips to issue stock on a bought basis through Kalani via an At-The-Market or "dribble plan". DryShips controls the timing and therefore the pricing of the issuance.
Most SA contributors and commentators howled in derision, declared that the issuance was massively dilutive, predicted the stock price would collapse, and urged readers to short the stock. Don't short!
For most in the SA community George Economou is the devil and he has delivered nothing but wrack and ruin to investors. Fair enough but past is not necessarily prologue.
Those shouting short assume the "devil" has no plan. Let's show some sympathy for the devil and assume he does and that it is potentially lethal to shorts.
Background
On Friday February 17th after the market close, DryShips Inc (NASDAQ
RYS) disclosed that it had filed a Prospectus Supplement ("Supplement"
for the issuance of $200 million of common stock through Kalani Investments LTD ("Kalani" . In the press release DRYS described Kalani as an investor, but, more accurately, it is functioning as an underwriter for what may be best described as an At-The-Market offering of common stock. DRYS sold off more than 20+% in the after-market as the optics of the disclosure, on a Friday before a three day weekend, was quite poor. Or was it deliberate? More on that later.
George Economou ("GE" , the CEO of DryShips, is easily one of the most hated people amongst the SA community and the Supplement filing resulted in several articles with titles like "DryShips Just Tanked Investors Again" and "Expect Significantly More Dilution and Downside". Even an article with a title that included the more promising phrase "Provides a Great Setup for Traders" was just another call to arms to shorts to bravely gird their loins and leap into the fray no matter the cost of the borrow or the margin requirements demanded by the brokers since the stock was sure to decline 90% from Friday's close. Comments on these articles were mostly what you would expect from an echo chamber with few souls braving an expression of dissent. GE is indeed hated. Fair enough. He has left a trail of wrack and ruin behind him in both the dry bulk and drilling rig segments and many a long-term investor or short-term trader has been left to lick their wounds. Because of this, he is viewed as the devil incarnate.
http://seekingalpha.com/article/4047733-drysh...athy-devil
Feb.21.17 | About: DryShips Inc. (DRYS) Get Alerts
Value, special situations, energy, commodities, shipping, long only
Send Message
Summary
DryShips Inc. announced on February 17th that it had filed a Prospectus Supplement for the issuance of $200 million of common stock through (not to) Kalani Investments.
The Supplement enables DryShips to issue stock on a bought basis through Kalani via an At-The-Market or "dribble plan". DryShips controls the timing and therefore the pricing of the issuance.
Most SA contributors and commentators howled in derision, declared that the issuance was massively dilutive, predicted the stock price would collapse, and urged readers to short the stock. Don't short!
For most in the SA community George Economou is the devil and he has delivered nothing but wrack and ruin to investors. Fair enough but past is not necessarily prologue.
Those shouting short assume the "devil" has no plan. Let's show some sympathy for the devil and assume he does and that it is potentially lethal to shorts.
Background
On Friday February 17th after the market close, DryShips Inc (NASDAQ
RYS) disclosed that it had filed a Prospectus Supplement ("Supplement" for the issuance of $200 million of common stock through Kalani Investments LTD ("Kalani" . In the press release DRYS described Kalani as an investor, but, more accurately, it is functioning as an underwriter for what may be best described as an At-The-Market offering of common stock. DRYS sold off more than 20+% in the after-market as the optics of the disclosure, on a Friday before a three day weekend, was quite poor. Or was it deliberate? More on that later. George Economou ("GE"
, the CEO of DryShips, is easily one of the most hated people amongst the SA community and the Supplement filing resulted in several articles with titles like "DryShips Just Tanked Investors Again" and "Expect Significantly More Dilution and Downside". Even an article with a title that included the more promising phrase "Provides a Great Setup for Traders" was just another call to arms to shorts to bravely gird their loins and leap into the fray no matter the cost of the borrow or the margin requirements demanded by the brokers since the stock was sure to decline 90% from Friday's close. Comments on these articles were mostly what you would expect from an echo chamber with few souls braving an expression of dissent. GE is indeed hated. Fair enough. He has left a trail of wrack and ruin behind him in both the dry bulk and drilling rig segments and many a long-term investor or short-term trader has been left to lick their wounds. Because of this, he is viewed as the devil incarnate. http://seekingalpha.com/article/4047733-drysh...athy-devil
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