DRYS: Another leveraged long play being set up.

DRYS is a piece of shit Greek shipping company whose arrogant con man of a CEO, George Economou, once explained matter of factly why his decision to make a business deal was done on the basis of loose credit and the dumb American investors (he called them the "dumbest around").  DRYS will likely BK before the credit crash is over but we are not there yet.  2015 should see a rebound on inflation and thus on DRYS ability to raise prices which can only be seen as a positive thing relative to its crushing 6 bn debt which is > 10x its 459bn cash.

If a stock gets crushed to the level that DRYS has gotten crushed down to yet it does not BK then all the sellers have already left the shares and short sellers have piled on.  Thus, at some point when they figure out that the shares will not BK there is a mass effort to cover their shorts, AKA a short squeeze.

The fundamentals on this Ponzi Play are already mind bogglingly low.  Forward PE of 4.67?  PS of zero point 18?  PB of zero point 13?  These are ridiculously low, right in the range of what Prechter's Conquer The Crash told us to look for.


More importantly, the cash burn rate is only 48mn per year.  So at least the worthless CEO is protecting his cash reasonably well.



Originally, the shares were kicked into the dirt because investors doubted that it could repay $700 million of debt due by Dec 1st.  But even after it paid that, the shares continued to plummet.  The new reason?  DRYS owns 78.3 million shares of ORIG (Ocean Rig) stock which has been taking a beating just like all other commodities.  But that beating, be it copper miners, gold and silver and miners of them, oil, etc. is likely near a reversal into 2015 because the EWI CCI commodity chart from 2011 predicts it to be the most likely course.  There are no other indicators out there to say that inflation picks up into 2015 - none.  Everyone is coo-cooing about cheap oil and acting like it is the new norm.  But wave B up of the commodity bear (that bear being deflation) is about to unfold and so EW practitioners already know what is most likely coming.

In any case, DRYS will behave very, very much like a hyper leveraged commodity play and I suggest that people treat it like a call option on inflation and commodities.  When Ocean Rig shares react to the new inflation, DRYS will benefit to say the least.  When interest rates move up and inflation rears its head, commodity shippers with huge debt will get to raise prices while inflation devalues their debt.

I cannot say whether or not DRYS is done plunging for sure or not but it is close.  It can be counted either with the blue count or the red count.  I won't hazard a guess but I will say this: if it falls back and just fills that open gap in a 3 wave retracement then the red count is in play.  If it falls to a lower low than blue 3 then the blue count is in play with a possible bottoming target of 30-50 cents.  If it goes way down there then I will jump on it and then treat it as a non-expiring call option.

Again, I suspect that DRYS will eventually succumb to its debt but not until the C wave of the commodity bear plays out mid 2016-2018.  I sure hope this goes to 50 cents!