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DryShips, Inc. Message Board

  • mokos2 mokos2 Dec 16, 2010 12:51 AM Flag

    DRYS$12-$18

    Lazards Capital Markets' Urs Dur has a “Buy” rating on Dryships and an $11 price target. Formerly Urs Dur was a shipping broker and he is the most accurate analyst covering DRYS.

    DRYS did a private placement for 20% of their UDW unit, "Ocean Rig", raising half a billion dollars.

    A condition of that private placement is for DRYS to spin off, in an IPO, the Ocean Rig division. The math is simple: half a billion for 20%, x5, = 2.5 billion.

    This isn't "maybe"; it is contractually stipulated in the Private Placement prospectus, with the PP going at $17.50 and the balance 80% of DRYS' Ocean Rig division to be IPO in the first half of 2011.

    This give you a market value for the Ocean Rig IPO of 2.5 billion dollars -- more than the total market cap for Drys' Dryships.

    Which gives you a $12.00 price target.

    Note that Goldman Sachs et.al. predict that the BDI will average 2,500 for 2011. That is +25% above where it is now.

    Note too that DRYS has presold charters for 82% of it's Dryships for nearly double the current spot. That leaves only 18% of the Dryships revenue open to spot. Thus, if the BDI goes down 10%, the real impact on DRYS is contained to the unchartered Dryships, just 1.8%.

    The contractually mandated Drillships IPO doubles DRYS market cap. That's $12-$18/share.

    So naturally, gliding into Friday's Witch there's turbulence, but the upside is so baked into the cake that it's FUBARing the volatility the options marketeers pine for.

    Pete Najarian & Brian Kelly can be mocked; but they're right because these facts are publcily provided and the math is the math.

    See you at $12-$18

    $50 call options for January is just outright interesting.

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DRYS
1.01+0.07(+8.02%)Dec 19 4:00 PMEST

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