In the past few weeks BALT, PRGN, and SBLK all used the recent strength as an opportunity to print and sell new shares. NM filed a huge shelf registration. Across the industry, management consensus is that this seasonal blip is a great opportunity to dump shares on the market. More than the others listed above, GNK really needs a secondary offering to shore up the balance sheet. SBLK was the latest to sell. Look at the price action prior to the news: a slow steady decline. The dirty little secret is that when the secondary is being marketed, buyers lock in their profits by shorting ahead of the sale, which drives the price down just prior to the determination of pricing for the secondary. To reward the commitment of the buyers, the secondary is priced about 10% below the market. Buyers use their new shares to repay those previously shorted and walk away with a quick low-risk profit. The companies get a slug of cash. Everyone wins except for the shareholders that weren't wise enough to sell when the company decided to sell. GNK may need to price the secondary at $3, but in retrospect when the shares are trading in the low $2s the massive sale at $3 will look like pure genius.
Either new shares will be printed and sold well below market value in order to raise cash to pay off lenders, or the equivalent will be achieved through issuance of convertible debt. In the last month, most of the drybulk shippers have announced secondary, with DRYS announcing after the close Friday. If you hold GNK on the morning of their announcement, you'll instantly lose 10%. DRYS, NM, SBLK, BALT, and PRGN managements all think that now is the time to SELL stock. If you think GNK is any different, you are about to be schooled. And tuition is not cheap.
Jim Pond - You don't have any idea how this business operates, do you? Yes, BALT did a secondary to raise cash that now sits in BALT's coffers. Prior BALT shareholders now own a slightly smaller fraction of BALT, but BALT has more cash. Those prior shareholders don't receive any of the cash raised by the secondary. The fact that BALT has more cash doesn't mean that GNK can use that cash to pay off creditors.
You posted your prediction just after GNK closed at $4.44, which is 45% higher than the current price.
And where is the guy that posts the company's daily cash flow?
Check your math. When revenues rise or fall, expenses stay the same. Roughly, a 1% change in BDI causes a 2% change in this company's net cash flow. But let's wait for the guy that posts the exact daily cash flow. Or maybe he only reports on days when it increases?
BDI is 2011 on 10/10/2013, down from 2084 last Friday 10/4/2013, and down from 2047 a week ago on 10/3/2013.
Saturnblue - Any way you look at it BDI is down today and down for the week. What planet do YOU live on? Oh, Saturn. I hear shipping rates are doing well on your planet. Too bad Genco doesn't have any ships there.
On 6/30/2013 they had current assets of $111 million and current debt of $1477 million. And you want them to pay a cash dividend! Are you a friend of the blue guy from Saturn?
LJ - Where are you? You posted your daily cash flow calculation every single day when it was increasing. But once it started down, you stopped posting. Why? Did you sell at the top? Or is cash flow no longer relevant now that it's not looking as good?
The last time ljdonemake posted his daily update on how much cash GuNK was raking in per day was 10/8/2013. On that day, the Cape market was at $38,865 / day. I wonder why he doesn't provide his daily updates anymore? Perhaps he saw that day rates had started to decline (Capes peaked on 9/25/2013) and he sold. Good for him! I'd hate to see someone get stuck holding the bag.
Do you not understand that expenses and interest must be paid before there is any cash flow? A year ago, rates were far below cash flow breakeven. That's not a meaningful basis for comparison. When rates spiked in September, cash flow was indeed excellent. But if BDI decreases another ~3%, CF after interest payment is back down to zero. Meanwhile, don't forget that the company violated their debt convents, triggering all long-term debt to be due immediately. They have a short reprieve before meeting the executioner, and when rates spiked I thought they could use the market strength to negotiate a new debt structure. That's why the stock spiked. Day rates seem to be settling to a level where GuNK is losing cash due toi their high debt load, while their competitors are making profits. The only way out of the situation is bankruptcy.