J Mako, yes nice analysis you've made on DSX.
As I understand DSX's strategy it's to have a cash position and access to debt such that management can grow revenue by acquiring ships when the shipping market is distressed. So buying DSX is a bet that management can determine lows in the shipping cycle well enough to astutely deploy company cash.
I use Yahoo numbers here (Which might or might not be correct): If DSX stock, now about $7-8, were to drop to ~$4.5/sh., then the market cap of the company would equal its current cash position. I guess I'd call that a very good price bottom, because management could take the company private with its cash (assuming loan covenants permit that, and management has any incentive to do it). During the depths of '08-'09, DSX didn't get below $8, and if the company can muddle on in 2011-2012 as analysts predict (assuming at least a few of them did actually evaluate DSX's time-charters), I'll go with $4.5 being my call as a bottom for the stock. (Of course, it's a guess because anything can happen at any time.)
Except for this year (2011), in each year since 2005, DSX has traded sometime above $15. I'll guess and bet that if I can hold on for a couple/three years, DSX will again trade sometime at $15, a gain of about $7 on my buy price. Versus a risk that the stock continues to drop to maybe $4.5, a $3-3.5 loss. The way I'm looking at it now, if I don't change my view or scare myself out of the stock, if the stock does drop to $4.5 I will want to up my few shares. |
