Forum Thread

Dryships (DRYS), a cautionary tale for any investor.

ghostofposterspast 8,438 1,531 September 18, 2015 at 11:00 AM
Deal
Score
0
5,292 Views

Thread Details

Dryships was a company that shipped things around the globe in big ships. It was no speculative highflyer. It was a solid company that traded at almost $120 before the great depression with reliable dividends. After the great recession it plummeted down to the single digits. I bought it at $5 thinking that it would recover once the world economy recovered. It then languished in the single digits for years. This month, the CEO of Dryships announced he was selling the ships to himself at firesale prices and that Dryships would have to take almost a billion charge to pay for it. So the CEO is giving himself the fleet of ships and is charging the investors for it. Now Dryships is a shipping company without any ships. The CEO has the gall to say that because he took action, "Dryships now has a good base to build from."

How is any of this legal? Where are the regulators? People often disparage the Chinese stock market as being phony and tout the superiority of the honest western markets. Not seeing it. I don't see much difference between us and them. This isn't the first time this has happened to a stock I owned. I had a biotech a few years back. They were on the verge of a breakthrough when the CEO sold the IP to a new company he formed. Less than a few months later, he then sold the IP to a large phamaceutical. His new privately owned company got all the profit. The publicly traded leftover shell and it's investors that developed it got butkus. That's American business for you.

41 Comments

1 2 3

Sign up for a Slickdeals account to remove this ad.

Joined Dec 2008
L10: Grand Master
6,025 Posts
1,944 Reputation
#2
How is this a cautionary tail? You made a highly speculative play (probably not knowing much about the industry or company), it bombed. NEXT!
Reply Helpful Comment? 0 0
"This whole.. I have XX company so my pee pee is 2" longer talk is hilarious. Who cares what company is cheapest, best, etc. Pick the company and plan you want and keep it to yourself."
#3
OP - if you had done the least bit of due diligence, you'd realize that the CEO of DryShips George Economou doesn't have the best reputation in the business.

It's kinda sad that investors do more due diligence for the laptop or refrigerator or washing machine you buy rather than doing it on the stocks you buy.

For a starter - read this article (from 2011) - http://seekingalpha.com/article/2...l-dryships
Reply Helpful Comment? 0 0
Last edited by siid September 18, 2015 at 12:29 PM
Joined Nov 2014
L10: Grand Master
8,438 Posts
1,531 Reputation
Original Poster
Pro
#4
Quote from siid View Post :
OP - if you had done the least bit of due diligence, you'd realize that the CEO of DryShips George Economou doesn't have the best reputation in the business.

It's kinda sad that investors do more due diligence for the laptop or refrigerator or washing machine you buy rather than doing it on the stocks you buy.

For a starter - read this article (from 2011) - http://seekingalpha.com/article/2...l-dryships
I guess you didn't buy facebook either then based on these articles about Zuckerberg's control of Facebook which is exactly the same problem as Economou's control of Dryships.

http://www.bloomberg.com/news/art...areholders
http://www.cnet.com/news/advisory...g-control/

The fact is, any "due diligence" on any corporate officer will turn up dirt. They don't get that position by not getting their hands dirty. You do due diligence on a company. And comparatively, DRYS was very profitable when I bought it. FB, not so much.
Reply Helpful Comment? 0 0
#5
Quote from ghostofposterspast View Post :
I guess you didn't buy facebook either then based on these articles about Zuckerberg's control of Facebook which is exactly the same problem as Economou's control of Dryships.

http://www.bloomberg.com/news/art...areholders
http://www.cnet.com/news/advisory...g-control/

The fact is, any "due diligence" on any corporate officer will turn up dirt. They don't get that position by not getting their hands dirty. You do due diligence on a company. And comparatively, DRYS was very profitable when I bought it. FB, not so much.

You are right...I didn't...but so what? There are many companies that I don't understand or am unwilling to invest in...and I do pass on all companies that have bad management.

Regarding "The fact is, any 'due diligence' on any corporate officer will turn up dirt," isn't true...

I suggest you take a look at companies with track record of good governance - BRK, MKL, etc.

Return OF my capital is more important to me than return ON my capital.
Reply Helpful Comment? 0 0
#6
Quote from ghostofposterspast View Post :
Dryships was a company that shipped things around the globe in big ships. It was no speculative highflyer. It was a solid company that traded at almost $120 before the great depression with reliable dividends. After the great recession it plummeted down to the single digits. I bought it at $5 thinking that it would recover once the world economy recovered. It then languished in the single digits for years. This month, the CEO of Dryships announced he was selling the ships to himself at firesale prices and that Dryships would have to take almost a billion charge to pay for it. So the CEO is giving himself the fleet of ships and is charging the investors for it. Now Dryships is a shipping company without any ships. The CEO has the gall to say that because he took action, "Dryships now has a good base to build from."

How is any of this legal? Where are the regulators? People often disparage the Chinese stock market as being phony and tout the superiority of the honest western markets. Not seeing it. I don't see much difference between us and them. This isn't the first time this has happened to a stock I owned. I had a biotech a few years back. They were on the verge of a breakthrough when the CEO sold the IP to a new company he formed. Less than a few months later, he then sold the IP to a large phamaceutical. His new privately owned company got all the profit. The publicly traded leftover shell and it's investors that developed it got butkus. That's American business for you.

You are right, shipping companies made stable income 10 years ago, but the shipping industry hasn't been the same since the recession. Too much debt and volatile oil prices have hurt companies. DRYS was one of those that had good potential to grow. Make sure you have a clear entry and exit point for any stock you trade, it's a worthwhile lesson, even if learned the hard way.

P.S. Ignore the other idiots here (too many people are miserable in their real lives and bashing others online is how they feel good about themselves).
Reply Helpful Comment? 0 0
Joined Nov 2014
L10: Grand Master
8,438 Posts
1,531 Reputation
Original Poster
Pro
#7
Quote from siid View Post :
You are right...I didn't...but so what? There are many companies that I don't understand or am unwilling to invest in...and I do pass on all companies that have bad management.

Regarding "The fact is, any 'due diligence' on any corporate officer will turn up dirt," isn't true...

I suggest you take a look at companies with track record of good governance - BRK, MKL, etc.
If you had done the least bit of due diligence, you'd realize that your statement is simply not true. Let's take a look at the first company you bring up.

http://www.businessinsider.com/re...ett-2011-4

So I guess BRK is another company you don't invest in right?
Reply Helpful Comment? 0 0
#8
Quote from ghostofposterspast View Post :
If you had done the least bit of due diligence, you'd realize that your statement is simply not true. Let's take a look at the first company you bring up.

http://www.businessinsider.com/re...ett-2011-4

So I guess BRK is another company you don't invest in right?

What do you mean? BRK has a fabulous reputation for being smart + honest. Their 50+ year track record of making shareholders wealthy and playing ethically should tell you something.

George Economou on the other hand is the complete opposite of Warren Buffett.

The difference between then is more than night and day. George has a track record of screwing over shareholders. Tell me the last time Buffett screwed over his shareholders? Nothing is impossible but in a world where all decisions are made probabilistically, I'd choose buffett over George Economou every time.
Reply Helpful Comment? 0 0
Last edited by siid September 18, 2015 at 10:11 PM

Sign up for a Slickdeals account to remove this ad.

#9
Quote from ghostofposterspast View Post :
I guess you didn't buy facebook either then based on these articles about Zuckerberg's control of Facebook which is exactly the same problem as Economou's control of Dryships.

http://www.bloomberg.com/news/art...areholders
http://www.cnet.com/news/advisory...g-control/

The fact is, any "due diligence" on any corporate officer will turn up dirt. They don't get that position by not getting their hands dirty. You do due diligence on a company. And comparatively, DRYS was very profitable when I bought it. FB, not so much.
DRYS was profitable because of all the commodity speculation...
Reply Helpful Comment? 0 0
#10
I shorted dryships for last couple years

and made a boat load of money


never bet on a sinking ship
Reply Helpful Comment? 0 0
Joined Nov 2014
L10: Grand Master
8,438 Posts
1,531 Reputation
Original Poster
Pro
#11
Quote from siid View Post :
What do you mean? BRK has a fabulous reputation for being smart + honest. Their 50+ year track record of making shareholders wealthy and playing ethically should tell you something.

George Economou on the other hand is the complete opposite of Warren Buffett.

The difference between then is more than night and day. George has a track record of screwing over shareholders. Tell me the last time Buffett screwed over his shareholders? Nothing is impossible but in a world where all decisions are made probabilistically, I'd choose buffett over George Economou every time.
You didn't click on that article did you? Also, we weren't just discussing the CEO, we were discussing corporate officers.

"Until recently, Sokol was considered a likely Buffett successor. He was chairman of MidAmerican Energy, one of Berkshire's most auspicious companies, and had turned around NetJets, a perpetual money loser and thorn in Buffett's side. In his annual letter in February, Buffett chirped, "I can't overstate the breadth and importance of Dave Sokol's achievements at this company." Sokol was clearly one of his guys."

"The month previous, Sokol suggested to Buffett that Berkshire acquire an obscure chemicals company, Lubrizol--since made famous by the revelation that Sokol, just beforehand, had purchased $10 million of its stock. When Berkshire did agree to acquire Lubrizol, in March, Sokol's personal stake was enriched by some $3 million."

That's exactly what George Economou does. Exactly.
Reply Helpful Comment? 0 0
Joined Nov 2014
L10: Grand Master
8,438 Posts
1,531 Reputation
Original Poster
Pro
#12
Quote from rebat View Post :
DRYS was profitable because of all the commodity speculation...
DRYS was profitable because the world economy was on fire. Good economy, lots of trade and thus lots of shipping. Why wouldn't it be expected to go back up once the world economy strengthens?

Lost in all this is what I really have a problem with. It's not that the world economy hasn't healed enough to require more shipping. It's the fact that the CEO of Drys has decided to raid the company of all it's assets. Once again, how is that legal? What about these so called well regulated honest western markets. We make fun of the Chinese markets all the time as being the wild west. How are we any different? If anything, when theft like this happens in China people at least go to jail. In the west, it's just called doing business.
Reply Helpful Comment? 0 0
#13
Quote from ghostofposterspast View Post :
DRYS was profitable because the world economy was on fire. Good economy, lots of trade and thus lots of shipping. Why wouldn't it be expected to go back up once the world economy strengthens?

Lost in all this is what I really have a problem with. It's not that the world economy hasn't healed enough to require more shipping. It's the fact that the CEO of Drys has decided to raid the company of all it's assets. Once again, how is that legal? What about these so called well regulated honest western markets. We make fun of the Chinese markets all the time as being the wild west. How are we any different? If anything, when theft like this happens in China people at least go to jail. In the west, it's just called doing business.
In the West? This company is HQ'd in Athens and in incorporated in the Marshall Islands. I know it's great for taxes, but did you not find that a bit shady?
Reply Helpful Comment? 0 0
#14
Quote from ghostofposterspast View Post :
Dryships was a company that shipped things around the globe in big ships. It was no speculative highflyer. It was a solid company that traded at almost $120 before the great depression with reliable dividends. After the great recession it plummeted down to the single digits. I bought it at $5 thinking that it would recover once the world economy recovered. It then languished in the single digits for years. This month, the CEO of Dryships announced he was selling the ships to himself at firesale prices and that Dryships would have to take almost a billion charge to pay for it. So the CEO is giving himself the fleet of ships and is charging the investors for it. Now Dryships is a shipping company without any ships. The CEO has the gall to say that because he took action, "Dryships now has a good base to build from."

How is any of this legal? Where are the regulators? People often disparage the Chinese stock market as being phony and tout the superiority of the honest western markets. Not seeing it. I don't see much difference between us and them. This isn't the first time this has happened to a stock I owned. I had a biotech a few years back. They were on the verge of a breakthrough when the CEO sold the IP to a new company he formed. Less than a few months later, he then sold the IP to a large phamaceutical. His new privately owned company got all the profit. The publicly traded leftover shell and it's investors that developed it got butkus. That's American business for you.
You keep avoiding the question about doing due dilleignece.
Why did you think this stock would recover if the economy recovers? Why wouldn't you just pick an ETF or Fund that covers the entire commodty or shipping industry? Were you doing some kind of "discounted" stock speculation? Do you know what DRYS actually ships and why there was even a big runup in prioir to 2008?
Also it looks like DRYS owns a bunch of oil rigs, which is directly tied to oil prices which have taken a hit too.
DRYS is a ticker i see every now and then, but I am not familiar with the shipping and commondy industry and have no inclinations to learn about it, so I never invested.


Also look like they stopped dividends in 2008 when the economy tanked and only had one payout since that time? So you aren't chasing yeild.

Also LOL at all the new stock issued on DRYs
Reply Helpful Comment? 0 0
Last edited by rebat September 19, 2015 at 11:00 AM
Joined Nov 2014
L10: Grand Master
8,438 Posts
1,531 Reputation
Original Poster
Pro
#15
Quote from rebat View Post :
In the West? This company is HQ'd in Athens and in incorporated in the Marshall Islands. I know it's great for taxes, but did you not find that a bit shady?
Last time I checked, Athens was still in the EU and the Nasdaq was still in New York.

As for being incorporated out of a PO Box on a small island. The following companies are also/have been that way.

Seagate
Coca-Cola Co
Oracle
Altria
Intel
Alibaba

Yes, some of these have since moved elsewhere ever since Obama started cracking down on this stuff but still.

So are all those companies a "bit shady" as well?

At least in the case of Drys it kind of made sense since many vessels sail with a Marshall Islands registry.
Reply Helpful Comment? 0 0
Page 1 of 3
1 2 3
Join the Conversation
Add a Comment
 
Copyright 1999 - 2016. Slickdeals, LLC. All Rights Reserved. Copyright / Infringement Policy  •  Privacy Policy  •  Terms of Service  •  Acceptable Use Policy (Rules)  •  Interest-Based Ads
Link Copied to Clipboard