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Euroseas Ltd. Message Board

  • bimmyyak bimmyyak Feb 14, 2008 9:24 AM Flag

    Why did it fall from $21.5 in October??


    I'm also new here. Was the fall due to dilution from issuing new shares? If so, then the new investor needs to be careful. Companies that issue new shares to grow (vs debt) can kill the common shareholder.

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    • check out GOGL.OL's recent Q report, which tells the tale of the global economy and dry bulk and container market very cogently, IMO

    • No, it had nothing to do with the dilution. Note that there were 3 dilutions in 2007 and for the first two Euroseas went nothing but up. For the third, it was already dropping like a rock at that point, and so was the whole sector. Look at the biggest competitor DRYS, from $130 to under $60, a drop of more than half just like Euroseas (from $21.5 to $9.)

      There's 2 answers to the question:
      1. Look at a graph of the BDI. Dry bulk shipping largely follows the BDI and expectations for its future.
      2. The market as a whole. In case you didn't notice, the economy took a little hit and the Fed has been dropping rates at every opportunity in recent months.

      These two things happened at the same time which was a bad piece of luck.

      I am getting impatient for them to start spending some of that money they collected though.

    • IMO the stock fell initially due to the public offering, then spot rates were hit - hurting the sector, then the baby got thrown out with the bath water, and finally they threw out the tub.

      Issuing new stock to expand may temporarily dillute EPS and ROE, but makes more business sense to me. I would much prefer a strong balance sheet and cash position in a "fickle" debt market. The Company has no timeline to repay or refinance and can be opportunistic when less savvy shippers are forced to sell off assets at reduced prices to stay solvent.

      When allowed and/or desired , management may also repurchase shares at reduced prices and retain the excess cash in its coffers providing additional value to remaining shareholders.

      As long as the World's economy stays strong smart shippers will make money and lots of it.

      • 1 Reply to rtsliker
      • I bought on the secondary in first week of November. It really dropped since then but getting better lately. It has been a big disappointment to me as I have done so well with DSX & EGLE. They all got hit but ESEA has had the worst performance of all the ones I own. I really can't explain it but it still has a way to go just to hit my $17 buy point. I suppose a lot of people will sell there but I plan to hang on for better days.

    • Want to know too!

1.77-0.11(-5.85%)Oct 21 3:59 PMEDT