Revisiting Dry Bulk Shippers

In retrospect my article on October 21st [A Near Term Top in Dry Bulk Shippers] looked quite accurate.

But with all the momentum in this sector; did you notice 2 sector upgrades this week alone - one by Bear Stearns, and another by Jeffries, is there anyone left to jump on this bandwagon? Even good ole Cramer jumped on the heavily sagging bandwagon this week with his picks of Diana Shipping (DSX), Paragon (PRGN), OceanFreight (OCNF).

Much like the Macau casinos I don't think this is the 'end' of the dry shippers, and the underlying fundamentals *do* look strong for the mid to longer term. In fact, much like the casinos, at lower prices the dry bulk shippers would strike my fancy. But my question is to a near term top, and potential pullback from here. Since Wynn sold, Wynn Resorts (WYNN) is down 11%, and Las Vegas Sands (LVS) is down about 13.5%. So far those short term calls look pretty spot on.

Just to make it clear (a) the timing was a bit lucky and (b) that was a near term call, and while this is not a 5 year story, it can provide some upside here in the next 18 (maybe 24 months) before the new ships start hitting the oceans. Since I did hit the nail on that call, I just want to make it clear I am a lot more constructive on these names at this level and have put my money where mmy mouth is with my purchase of Excel Maritime Carriers (EXM) which I added to today. As I wrote in the article, the type of specula...err investors in the stock at the time would flee en masse at the first hint of anything wrong, which they are proving to do. Creating opportunities. But again, falling knives can fall much farther than one expects, as emotions are overdone both on the top side (going up) and downside (going down). But I like these prices much more than the prices on these stocks 3 weeks ago. It seems those speculators just moved en masse from dry bulk shipping, to solar stocks. Ah, always a bull market somewhere ;)

There are so many names in this sector but just picking 3 names that are investors favorites
DryShips (DRYS) at time of call $129, peaked $131, today $98
Diana Shipping (DSX) at time of call $36, peaked $44, today $31
Excel Maritime (EXM) at time of call $76, peaked $82, today $48

Once again, any whiff of global slowdown and these stocks could go much lower but thus far Baltic Price Indexes are stabilizing and even if they fell 10% from here it would be record times for the industry but I still think if they fell even 10% you'd see panic in the streets, even if gthe medium term outlook for the sector was fine at those prices. That's the balancing act of being in this type of sector with those type of frantic investors. Hence why I am only allocating a bit to this sector.

Long Excel Maritime Carriers in fund, no personal poisition