- Today's trading brought a reality check for dry shippers: DRYS closed -85%, DCIX -68%, GLBS -58%, SHIP -46%, ESEA -43%, TOPS -28%, SINO -26%, GNK -24%, PXS -23%, EGLE -22%, DSX -15%, NMM -5%.
- DryShips lit the fuse when it announced a share sale to raise $20M, but and Diana Containerships and Diana Shipping chimed in with quarterly earnings that missed expectations (I, II).
- "It's people coming to their senses," says Stifel's Benjamin Nolan, who covers maritime sectors. "These kinds of extreme rallies that aren’t entirely linked to fundamentals don't tend to be permanent."
- Investors likely also were worried that other companies would follow DRYS' lead with their own stock offerings.
- "Given the sheer size of the volume and the continued (relentless) pricing movements, we believe momentum based algorithms (quant trading) are likely a very significant factor/catalyst at this point," says Wells Fargo (NYSE:WFC)'s Michael Webber.
- But Webber also says the troubled sector provides an opportunity for longer-term investors once the market settles down.
Original article