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FreeSeas Inc. Message Board

  • skipjackmack skipjackmack Aug 31, 2010 11:11 AM Flag

    Caught in a classic death spiral

    Today it took just 65k shares sold at opening to dump the stock 9% down to 0.90.

    This stock is now caught in a classic DEATH SPIRAL and all because of its strategy.

    Here's the rationale:
    A. FREE gets dragged down by any declines in the wider market based on its beta.
    B. FREE gets dragged down by any decline in the BDI or BHSI because it confirms to the institutions that its too risky to have such a high level of spot market exposure.
    C. FREE doesn't benefit from any rise in the BDI or BHSI, because institutions don't know what the spot markets will look like next week, let alone next 1-3 months.

    RESULT: FREE keeps ratcheting downwards.

    Something drastic needs to change. Expecting a reverse split to be enough of a change is just naive and daft...it will work against FREE.

    A shift in strategy DOESN'T HAVE TO BE PERMANENT. It could just be temporary to help stabilise the stock and get it back on track attracting better support from institutions including banks.

    This stock now has $0.55 written all over it. IF YOU DON'T LIKE THE SOUND OF THAT, WRITE TO THE MANAGEMENT AND ASK THEM TO REVIEW THEIR STRATEGY BASED ON THE FACTS:

    Since Sep 2009, this stock is down over 60%. Other shipping stocks are down 20-30%. The wider markets are flat / slightly up.

    Since 2006, this stock has dropped from $5.50 to $0.90...the wider markets are down far less.

    The market values this company significantly less than its break up value ($1.75-2.00)...in other words the market is saying that this management is at more risk of destroying value than creating it...HOW'S THAT FOR CONFIDENCE IN THE MANAGEMENT?

    sjm

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1.15Apr 22 4:00 PMEDT