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Strategies & Market Trends : Value Investing

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To: Madharry who wrote (28750)	10/31/2007 10:38:13 AM
From: E_K_S	Read Replies (1) of 78673

Thank you Madharry - I originally purchased shares as a value opportunity when the stock IPO'ed 18 months ago but when it lost half it's value, I was not sure if I made the right decision. If you search the thread for "Drys" you can review my posts and decisions on my investment strategy. I doubled my position at $10 believing their fixed assets (ie ships) were selling below book value and their divided at the time generated good income while I waited for day rates to increase. Since that time day rates increased from $87,000/day to $187,000/day and the company was making fists full of money. The CEO continues to leverage the company using large amount of debt to replace their old ships with newer and larger ones and utilizes the spot market to maximize their current revenues ( a risky strategy). The company has decreased the average age of their fleet from 12 years to just under four years while increasing their earnings eight fold. At the current day rates, their entire fleet should be paid off in 36 months from their current cash flow. I have peeled off shares at various prices to pull my seed money out and book a healthy profit leaving 1/3 of my shares to run. Based on the current demand for their ships and the limited supply of new ships entering the market, Drys could be valued in the $250 range by the end of 2008, earning $25/share. This is a once in a life time run for me but it helps as I have my share of losers (ie WON) which offsets the huge gain. The key is to let your winners run, try not to trade too much around your position and evaluate the potential earnings prospects from time to time to validate that it is not a company specific event but a sustaining industry growth trend. Buying more at the low helped too. EKS

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