Doing a simple progression chart at a 2% daily growth rate (current) the BDI could cross 4000 by September 20th. If this is anywhere close to accurate the mgt decision to stay in the spot market short term may be a good one.
A rising BHSI coupled with a spot market strategy will prevent FREE's stock tanking BUT WON'T HELP IT RISE by anywhere near what it's really worth.
Even if BHSI gets back above the May 2010 highs of 1500 and dow gets back up near 11000, we'll not see FREE much above $1.35.
According to NASDAQ, FREE has 11 institutional holders with a total of 8.2% ownership. DRYS has over 150 institutional holders with 19.2%, DSX has over 150 with 32%. Spot the pattern??
IN FACT, ACCORDING TO THE NASDAQ DATA, MY COMPANY IS ACTUALLY THE 4TH LARGEST CURRENT INSTITUTIONAL SHAREHOLDER!!!! That's completely NUTS. (i might contact them to get cited ;-).
Unless you are content to buy at 1.10 and sell at 1.40 (not bad trading at all), then you need the institutions involved to help improve the liquidity and get the share price up to what it's really worth.
HOW DO I KNOW?? BECAUSE I'M SITTING ON A PILE OF CASH THAT I'D INVEST IN A BLINK IF THEY CHANGED THEIR STRATEGY. I'd be the 2nd largest institutional holder tomorrow if they started making the right noises.
The ONLY OTHER WAY is VERY LONG (5yrs+) AND VERY RISKY. To double the sp in 5yrs is not a great risk-weighted ROI...and that's why the stock ISN'T MOVING AND I'M THINKING OF SELLING OUT...and imagine what that'd do to the sp!
NO BRAINER SOLUTION: FREE should lock in its rates for the next year...that would stabilise its business AND keep the shareholders, institutions and banks happy. They could even push forward with their new builds knowing that BHSI volatility won't impact and cashflows are known. Doesn't mean they can't REVERT to its spot market strategy in the future when BHSI is 2000+ and FREE has a wider fan base.
I'm curious to get your input on BALT which was specifically started up by Genco to trade aganinst the BDI by operating strictly on a spot market basis? They are paying a dividend, buying new ships, selling more shares, etc. Why is that OK for BALT and so terrible for FREE?