Saturday, November 2, 2013

11/2/13 Metals to Test Gold Bugs' Mettle

I'll go out on a limb and predict that GDX will retest (and at least briefly undercut) the October 11 low of 23.05. It may even retest the June 26 low of 22.21. How do gold bugs handle the stress? I think they enjoy being tested, in much the same way fire tests the purity of gold. They're proud to exhibit unshaken faith in the value of gold, especially during torrential downdrafts in sentiment. I think it's a mild emotional disorder, but the volatility it creates draws traders looking for action. Now there's a word that's reminiscent of the Sixties. I once hosted a dance for the Asian-American Association at Michigan. A couple of us were assigned to sell/collect tickets at the door. Jim spotted a group of five Taiwanese guys loitering in the hallway and waved them over. 'Hey, you guys want to come in?' 'Uh, no. We're waiting.' 'Waiting? Waiting for what?' 'We're waiting for...the action.' 'Action? What action? There's no action here.' I guarantee 'action' in the metals next week.

172 comments:

  1. I think the bottom in Miners comes waaay lower

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    Replies
    1. They needed to be DUSTed off first.

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  2. Scale into silver with a $12 handle, ride it to $150 in 10 years, LOL! :)

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  3. Greetings from Davis! Wo is kicking butt and taking names in State Cup. 3 games sor far and up 9-0. Her team has given up 3 goals all year.

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    Replies
    1. Wow. Time to start researching scholarships, bro.

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  4. Real estate. I logged in to Zillow for the first time in awhile. Our estimated home value has skyrocketed since 2011, and based on the 10-year chart is now higher than the previous peak in 2007.

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  5. There's too much bullish sentiment in miners right now. After the October sell off, traders were rewarded with a nice spike up. Now everyone seems to believe buying the current pullback is the right move. It may well be the right move. I just think too many traders are convinced of it.

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    Replies
    1. In other words, what if the overall trend remains down? I no longer read comments targeting Gold 1000. Most traders are looking for maximum downside of 1250-> launch to 1425.

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  6. http://www.ritholtz.com/blog/2013/11/bubbles-bubbles-everywhere/?utm_source=dlvr.it&utm_medium=twitter

    Excerpt:

    Humans Never Learn

    Financial bubbles happen frequently. In the 1970s, gold went from $35 to $850 before crashing. In the 1980s, the Japanese Nikkei went from 8,000 to 40,000 before losing 80 percent of its value. In the 1990s, the Nasdaq experienced the dot-com bubble and stocks went from 440 to 5,000 before crashing spectacularly in 2000. The Nasdaq lost 80 percent of its value in less than two years. Many housing bubbles over the past decade in the United Kingdom, United States, Ireland, Spain, and Iceland saw house prices go up 200 and even 500 percent and then lose over half their value in real terms.

    The U.S. market has had frequent crashes: 1929, 1962, 1987, 1998, 2000, and 2008. Every time, the bubble was driven by different sectors. In 1929, radio stocks were the Internet stocks of their day. In 1962, the electronic sector crashed. The previous year, most electronic stocks had risen 27 percent, with leading technology stocks like Texas Instruments and Polaroid trading at up a crazy 115 times earnings. In 1987, the S&P had risen more than 40 percent in less than a year and over 60 percent in less than two years. In 1998, it was strong expectation on investment opportunities in Russia that collapsed. In 2000, the Internet bubble was so crazy that companies with no earnings and often no real revenues were able to go public, skyrocket, and then crash. Eventually, in all bubbles fundamental values re-assert themselves and markets crash.


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    1. Look, I admit it. I'm as big an idiot as any other investor. So the only 'defense' is to recognize the syndrome, and take steps to ensure I'm not holding when the markets crash.

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    2. Johnny Mauldin. Always calling for a crash or bubble. Gotta get them readers somehow. Too bad he never discloses his investment track record.

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  7. Gold -- Some Zig-Zag & Triangle options going forward ...
    http://www.thewavetrading.com/2013/10/27/gold-update-of-the-long-term-ewp/

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  8. I completely agree that there are too many bulls on miners / gold. The investing public still lacks trust in the government and is heavily invested in Gold. No investment sentiment survey will tell you that.

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  9. You know what I think? For the remainder of the year, we'll need to disregard all the crap out there and just focus on what works best for each of us.

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    Replies
    1. Well, that's always the case. But we're dealing with the tail end of a year that's seen the SPX rally another +20%, while bonds and miners have sold off hard. All kinds of strong mean reversion currents can and will appear at any time.

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    2. I honestly had no idea the S&P was on track for $30 EPS per quarter. I was still working with a $107 to $110 estimate. Using this yields a much different upside target...toss in earnings growth now from Europe and Japan and I can see why some people are saying we might go a good deal higher over time. It's been a long long time since we have had the largest economies in the world in growth mode all at the same time.

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  10. I still think the crash in 2008/2009 was a once in a lifetime occurrence, like the great depression and there won't be another one for another 70 years.

    The crash in 2000 was pretty easily avoidable by staying away from obviously overvalued tech stocks and S&P 500 large caps. The problem in 2008 was it was a housing and banking crash which is such a huge part of the economy that it bled into everything, even things which should have been safe. And even the 2008 crash in banking was predictable with the NINJA mortgages and all that crap ( I shorted banks for 2 years before giving up in 2006), but the hard part was seeing how it would affect the overall market.

    At the current time, I have pretty much zero worries about a crash. Maybe we get a pullback or even a 20% bear market on a war or inflation or something, but no way I think we get another 2008 50% loss in almost everything type crash.

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    Replies
    1. I like hearing this from someone I have a lot of respect for.

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  11. Moody’s says ABX's planned $3B capital raise and suspension of the Pascua-Lama mine “in order to reduce its debt, improve its cash flow and bolster its liquidity are credit positive but do not impact its Baa2 senior unsecured rating and negative rating outlook."

    So there.

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  12. 2nd- Was today your turn to guest coach the Raiders defense?

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    Replies
    1. I would never be asked to guest coach, since my only advice to players would be to walk away from the game while they still can.

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    2. Man, no shit hun? I'll do everything I can to keep Corn Head away from that sport.

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    3. Which game exactly should we be walking away from? :)

      I found a kernal of corn on my front steps yesterday, hard as a rock and no idea where it came from. My guess is a bird dropped it.

      Is this a sign to buy the CORN ETF?

      Delete
  13. Are you kidding me!!! The Bills QB's last name is Tool? "No more soup for you!".

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    Replies
    1. I saw that too. Must have been annoying growing up with that name but now he's having the last laugh

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  14. Zgnx share offering. Let's see what they price it at. That's the bogey

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  15. AA - This chart is looking pretty positive to me, are you guys still in? I recall BB is in, not if anyone else is.....

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  16. GMO - "General Moly Inc: Financing risk dominates, project update expected NT"

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    Replies
    1. noon time
      not today
      no tell-en
      near term
      next time

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    2. I have no idea what NT means, I've been trying to open the link but can't, yet. Probably have to restart my browser to make it work. I hate MSFT!

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    3. Oh yes of course, NT means Near Term.

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  17. YRCW- I wonder who's sell-um today...

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  18. ZGNX -12%

    Zogenix Announces Proposed Public Offering of Common Stock

    BALT GL with your trade TOF

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    Replies
    1. No price that I see on their site.

      VLCCF did this a few weeks ago same result to stock price, offering at $9, currently $8.5 both opps in the making perhaps.

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  19. They usually announce those offerings after they gather bids is my interpretation. I think we will found out soon. These biotechs almost always seem to retest the offering price even if they rally after the pricing is announced.

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  20. YRCW rumours:

    http://www.truckingboards.com/forum/yrc-freight/99615-7%25-rumor.html

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    1. I don't understand why they didn't do an equity raise when the stock was in the 20's or 30's. Shit it was one of the reasons I wanted out at $14 or $15 whatever it was.

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  21. I believe 2nd owns AA as well. Not sure why we are seeing the big jump in price today to be honest...

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    Replies
    1. I think it's b/c the EMA's have crossed upward, a powerful signal.

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    2. It's in a new uptrend...plain and simple. Going to $13 next year.

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    3. at least that's my take.

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  22. Who's buying the pullback in the dry bulk shippers from the morning highs?

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  23. WLT up 90% from the bottom. Good lesson in my opinion of sentiment. Lots of bottom callers when I was trying to trade it around $17. When the bottom fell out it dropped 50% in a month, double bottomed then rose 90% so far. Wouldn't be shocked if JCP bottomed out recently for a while as well. Similar setup.

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  24. NWLI - So far, I've only managed a partial fill.

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    Replies
    1. Have not traded that one in awhile, hard to get fills. I just tried to become the bid at the end of day and it basically worked if you had patience over a few day period.

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    2. CP, you still in CCL? looking good.

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    3. Yep, still in there and counting my blessings, this position has begun to restore my faith. Dangerous frame of mind, I know! LOL! :)

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  25. Replies
    1. Nice. I daytraded a bunch of BALT today...bought around $4.82 and sold at $4.90. Still holding a core position though that I'm hoping to hold for a while.

      Delete
  26. EGLE has undercut 50% retracement (@6.37) tempted here.

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  27. SYNC...I knew this one was going to go...earnings this week. Could be some fireworks.

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    Replies
    1. I bet someone with deep pockets just dropped $100k into it thinking it has the potential to go up 2 to 4 fold.

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  28. (a) AA closed out entire position @ 9.89.
    (b) ZGNX> added @ 2.62.
    (c) UNG> opened a small position @ 7.08.

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    Replies
    1. Nice call on the secondary offering in ZGNX, tof.

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    2. It was pretty easy to see...very little cash with high burn rate. Still waiting to see what the offering price is. Probably will know within a week.

      Nice trade on AA>

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    3. I agree, That secondary call was uncanny, and he told us three days ago. Impressive.

      EGLE long at 5.93, I was tied and thru in a low bid and was filled when I woke up.

      Zgnx, 2nd likes this so much, I think i'll do the three day rule on knock downs here.

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  29. DRYS reports after hours.

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    Replies
    1. NMM had good numbers on Friday and jumped around 5%. Seems to be good news coming in.

      Still holding parent company NM that you recommended last year. It's also been doing well. Took a while to get going, but is a double YTD in 2013. Similar feel to AA actually.

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    2. BB - NM is great man. I'm glad you're still holding it. Probably pays you a 8% or so dividend on your cost huh? I'm hoping the same happens with BALT in the next year or so. I have a big position in it that I'm hoping to hold. I like them better than the others because their balance sheet is stronger and their ships are newer. Only concern I have is their ties to GNK should GNK go belly up. They don't have any risk but the perception of their ties (they were a subsidiary of GNK that IPO'd) could bring them down temporarily.

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  30. Anyone playing JMBA before earnings tonight?

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  31. The 'secret,' if there is one, to trading swings in volatile assets like Natural gas, is to play small. Opened a starter position in UGAZ also @ 12.32.

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    Replies
    1. The "secret is there is no secret" but I like your secret.

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    2. It's the kind of secret that qualifies as 'when the student is ready, the secret appears.' I'm the slow learner who just got tired of watching most of my 'calls' take off as soon as I bail due to 'too f---ing large a position.'

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  32. AGO up 2% today.

    Peurto Rico October revenues at $856 million, $110 over budget. Takes some of the pressure off their bonds and AGO's insurance of these.

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    1. I'm telling you that Kyle Bass seems to be a good contrarian indicator. He was trashing PR a few weeks ago. Basically exactly when MBI bottomed.

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  33. NWLI - Okay, my 1st tranch was filled.

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    1. Good luck!

      You've got several things working for you here:

      1. Lowest valuation in 20 years other than since the financial crisis
      2. Stock hits book value during up-cycles, so should do so again over next few years and would be a double
      3. Stock moves up as rates go up and, after the recent pullback, they should continue up again soon. I have not doubt they will go higher in the next several months (unless something really horrible happens like a Syria attack on Israel)
      4. Earnings coming up in the next few days and the stock generally bounces on earnings the last several quarters
      5. Business is well run, so risk is low

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    2. I agree. Over time this one should work out well. I've been researching AEG. I'm pretty fully invested right now, though.

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  34. Replies
    1. An excellent choice Bubba ... may join you in that ...

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  35. Wow. I got lucky buying that dip in DRYS. Bought at $3.09 and just sold at $3.2. There's a lot of money pouring into these stocks. Negative earnings don't matter. Kind of reminds me of the banks in mid 2009.

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  36. Miners and metals: http://www.theatlantic.com/china/archive/2013/11/how-china-profits-from-our-junk/281044/

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    1. They're welcome to my 5yr old Chinese chest freezer that blew it's freon out of a rusted steel tube(planned obsolescence), I had to buy a new one. So if they don't want this freezer, I figure I'll hold onto it so I can be buried in it as an alternative to being cremated as was planned. It may be illegal to die by then, I'm not sure......

      Anyway, I guess they must've sold a few million of those 5yr-life freezers to US households and those are now winding up somewhere?

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    2. Apparently copper is super valuable....more than freon or steel. It may have just been a case of lousy design instead of planning.

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    3. Of course you would disagree with my analysis, LOL........

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  37. Drys revenues were actually 20% higher than py and estimates. That's a good sign

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  38. Replies
    1. AA - Definitely cause for a jigger of Patrón.

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  39. Re UNG/UGAZ> I've discovered that even small starter positions can sting. However, compared to the kinds of position sizes I took in the past, I'm now able to sit back and pause, 'Whoa, bro. What's the problem here?' There is no problem, and that's the point.

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    Replies
    1. BOIL - Right at the bottom of descending channel, VERY tempting..........

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  40. Ritchie Bros: Strong beat driven by record Auction Revenue Rate

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  41. They're buying the dip. Now known in some circles as BTFD (buy the freaking dip).

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  42. JB sent this link. HFT. Looks pretty cool if nothing else.

    http://www.youtube.com/user/VPROBacklight?feature=watch

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  43. NWLI - Not sure why my order isn't showing up on the bid........ someone's been taking some of their gains off the table going into this earnings, trying yesterday's luck again (BTFD!) to increase exposure a little.

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  44. Dry Bulk Shippers ripping today on the back of much better Rev growth than expected from DRYS. Also helps that the BDI is back up at 1,600 after free falling the past couple of weeks:

    http://www.dryships.com/pages/report.asp

    I still think that shakedown was no different than the many shakedowns in the solar stocks after they bottomed last year. I'm biased of course.

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    Replies
    1. I can envision a scenario where BALT is trading north of $10 and paying a $0.30 to $0.40 dividend within 18 months. Their goal is to pay out the majority of net income in dividends.

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    2. $4.50 was such a great entry, I smelled a big fat RAT too........... WTF, why do prices trade that way? Fear of earnings but we're not even there yet, so much fakery?

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    3. Yeah it doesn't always work that work of course but there are definitely similar patterns across stocks. The setup was perfect.

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  45. NSPH reports tomorrow morning.

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    Replies
    1. I get the feeling it won't bean uplifting event, not sure what they can do that someone else can't. Hitachi took an interest for some reason, wonder if there's just some convoluted relationship with Japanese corporate(family) culture or if it's a genuine interest in the technology?

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    2. That just looks like a toe tagger doesn't it? What's going to save them? Same with SQNM.

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  46. YRCW skyrocket out of the blue. Wonder if that means bad earnings are coming up.

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  47. Replies
    1. We've learned our lession, and have the lesions as proof!

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  48. TSLA to $200 tomorrow? I wouldn't be shocked.

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  49. NWLI - Really strange, a few shares picked up at a price that hasn't traded yet today.

    SAC - Is the return of capital a potential cause for near term downside?

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    Replies
    1. Somehow, my order today was filled at a price lower than reflected by today's reported low of $202.26........

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  50. URG - Someone wants in at any price......

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  51. simple and concise:
    http://finance.yahoo.com/news/dry-bulk-shippers-aren-t-170003631.html

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  52. Interesting dynamics in the market today. DJIA recovers from a -100 point drop at the open. Miners off -1.4%. AA pulls back -3% to find buyers, and now almost flat. The 30-year bond off >1%, with TLT @ 105.19.

    (a) Closing UNG/ UGAZ @ 17.26/ 12.65.
    (b) While the US indexes appear ‘resilient,’ what concerns me is the -2.7% selloff in Emerging Markets. EEM currently at levels not seen since early October.
    (c) Pondering a position in bonds.

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    Replies
    1. I'm glad you pointed that out (EEM), I'm going to look and see what happened......

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  53. I have to admi, I had given up hope of avoiding losing my azz in this damn market but now it looks like I might actually come out okay. You guyz are the snap-pop-shizzle! :)

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  54. BALT - LOL, just noticing the Sept 1st gap up closed last week. Whoda' thunk it?

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  55. Shorted SPY after hours at $176.2. Decent sized position on margin that I plan on holding overnight as a hedge.

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    Replies
    1. I may actually peel it off because the emerging markets are nearing oversold status and if they bounce then the market overall should hold in ok. Still thinking about it.

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    2. EEM is -5.6% for the year. My guess is it closes green by year end.

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  56. Remind me why we didn't all go long CSIQ about 6 months ago...

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    Replies
    1. up 729% YTD, 405% last 6 months.

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    2. I'm still experiencing a tough time accepting solar except for the LED lighting aspect and especially parasitic power consumption, which to me is a big deal if someone figures out a way to flesh it out.

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  57. HTZ - Got a little ahead of itself apparently? I was just hearing about how the travel industry was coming on strong and now this........ :(

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  58. GTAT - Day one of massive rally? Sapphire substrates!!!!!!!!

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    Replies
    1. I was watching RBCN wither away all day today.

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    2. Correction, sapphire optics. Not what I would've anticipated but hey, it's AAPL! Seems like AAPL is trying to become US friendly.....

      Delete
    3. RBCN - Yeah, I'll have to give this some thought but seems like an equipment vendor just became their competitor(AAPL backed, no less).

      There's a new sapphire substrate manufacturer on the block. I guess it's not such a trick to manufacture sapphire substrates but usage may be on the increase (bummer it's optical, LOL) I guess Germany ranks high on the list of optics, too and Japan is no slouch either?

      I kinda see this as AAPL creating US employment for political appeasement.

      Delete
    4. RBY - Wonder why this one didn't go bananas too, Rubicon.......

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    5. And WTF, why do cellphones need higher resolution anyway?

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  59. Alright. Closed the NQ after hours @ 9.67. I was only holding 500 shares, but what's the point? Sure, it could gap up 2 on Wednesday. It could gap down 2 on Wednesday. Whereas an -0.08/share loss seems negligible, like an ante for the poker game.

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  60. ARII - Is there a shortage of rail tanker cars?

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  61. EURO QE - Europe needs a growth path and perhaps by now the market is finally prepared to accept the need for some eurozone QE?

    If so, then the purpose would be to maintain low eurozone rates, thus wouldn't that seem to indicate US rates may rise?

    It's not easy to anticipate these mechanisms.... Let alone the timing.

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  62. ZGNX offering at $2.25. That's the bogey. Let's see if they test it. I'm waiting for a bottom and then a re-test or a slightly higher low to re-enter.

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    Replies
    1. it might very well have bottomed today actually. a 5% drop right into the close looks suspect.

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  63. I closed my short of spy for a small loss before ah closed thinking that low RSI-ema reading for eem was actually a buy signal. We shall see if that is right. I also want to focus on sync tomorrow to see if I can get a decent entry point. I had a feeling about that one...it's up big after earnings .

    I was tempted to sell some Balt right before the close to buy sync but failed to do so. Prob will regret it but I just think the upside for Balt is really high over the longer term.

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  64. Overbought condition worked off according to Bespoke:

    http://www.bespokeinvest.com/thinkbig/2013/11/5/stocks-neutralized.html

    Time to start the year end rally? Futures good this morning and seems like positive news from Europe.

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  65. Nice numbers out of ING this morning - seems to be doing well at getting government paid off and spinning out insurance arm. Even after it's nice run, it is still only at 8.5 times next year's earnings and 70% of book value. Hopefully, the dividend is reinstated next year.

    Pretty good way to play the Euro-revival if we get a pullback.

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  66. And Canada is getting the most press in a long time from the mayor of our biggest city Toronto, who's been denying for months that there's a video of him smoking crack, but said, "yeah I have smoked crack, but don't remember when because I was in a drunken stupor"

    https://twitter.com/search?q=%23inadrunkenstupor&src=tren

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    Replies
    1. I listened to this on Stern this morning. What the heck is going on up there?

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    2. I heard about that one. Didn't catch who or where, just the basic story. I guess Toronto must be ecstatic over joining DC's party.

      Delete
  67. NSPH- Anyone have time to listen to the call? #'s look uninspiring.

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    Replies
    1. Right, not moving up so IF something positive DOES happen it's not today, apparently.

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  68. NQ> I know it, no need to say it.

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    Replies
    1. I almost bought in the $9's pre-market. 2nd mistake on this sucker.

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  69. ZGNX- I still bet it gets really close to 2.25.

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  70. DMND - Still a small cap? Only a double so far.

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  71. Added BALT at $4.95 to $4.99. I'm taking this as a shakeout in a new bull market.

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    Replies
    1. And more at $4.82. Murphy's law...should have sold and bought back in. Knew it but ignored it in the odd chance that the market actually allows something to stay up after going up.

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    2. EGLE, I bailed yesterday on it, down another -10% today. The swings are???

      Anyway I should close shop for awhile as property went to escrow and I find it very distracting to attempt to trade.

      GL everyone.

      Delete
    3. T3 - I steered clear of EGLE because of the threat of an equity offering looming.

      Is that an investment property that went escrow?

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    4. Nah we are selling our home, after 38 wonderful years here we are looking for less population density and more open road. Looking forward to a new adventure.

      How is your family taking to Boston life?

      Delete
    5. T3 - That's awesome. Where are you living again? And where are you looking to move to?

      I love it here in the burbs of Boston but my wife is really homesick. Hopefully it passes and we spend a few years here near my side of the family. If not it will be a fun adventure for a year.

      Delete
  72. TLT @ 104.96. RYGBX at the close.

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  73. TOF- What do you make of BALT's earnings?

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    Replies
    1. 45% increase in revenues is great. Dividend up to $0.02 per quarter now from $0.01. I'll be looking to add to it if they sell it off.

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    2. Anticipate 5 vessels will be drydocked in 2014.

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    3. Saw that...the drydocking is for fuel efficiency upgrades and will span about 100 days. But they're also bringing on 4 new vessels so the net of those two is still positive. The two they just announced will be delivered by year end so they will probably be docked some time in Q2 is my guess. So you have 5 off for 1/3 of the year or a total of 1.7 less ships for the entire year. 2 of the 4 new ones will be on all year and the other two not sure maybe 1/2 of the year to be conservative? That's 3 up vs 1.7 down. Then you factor in whatever the change is in spot rates.

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  74. NSPH- Cowen chasing price down with new PT of 3.50 from 4.50.

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  75. We make capital expenditures from time to time in connection with vessel acquisitions. Currently, our fleet consists of two Capesize, four Supramax, and five Handysize vessels with an aggregate capacity of approximately 736,000 dwt. After the expected delivery of the two Capesize vessels that Baltic Trading has agreed to acquire, we will own 13 drybulk vessels, consisting of four Capesize, four Supramax and five Handysize vessels with a total carrying capacity of approximately 1,095,000 dwt.

    In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings for our fleet. None of our vessels were drydocked in the third quarter of 2013 and we currently expect one of our vessels to be drydocked in the fourth quarter of 2013. We further anticipate that five of our vessels will be drydocked in 2014.

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    Replies
    1. yeah see my response above. I didn't also factor in the cost savings from the fuel efficiency this will provide since I have no idea what it will be. that's why they're drydocking them from what I've read.

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  76. Mark - I'm hoping they sell it back down to $4.3 to $4.5. I'll be looking to add some there. I think they end up paying a 10% dividend on today's prices within a couple of years.

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    Replies
    1. What do you think mark? One thing I was thinking is maybe the market sells it off at some point out of fear that gnk goes belly up (even though they're not liable)

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    2. Hmmm.... I've looked into this as best as I can. 4.3-4.5 is worth a shot. Thanks for the info.

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    3. Revenues were up almost 50% from last quarter. Pretty ridiculous leverage.

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