[DRYS] update

As I have indicated in the past, DRYS is not for most people.  Having said that, this blog is not for most people and DRYS has been written off for dead now.  So today I am back into it with a small amount of highly speculative money for 10k shares at 9.62 cents per.

When I first began writing about DRYS I warned that it was run by a Greek con man piece of shit named George Economou.  Just Google his name and you will see how he milked all the value out of DRYS (a publicly traded company) into his own private ventures over the years.  The public was in denial about this for the longest time and now everyone knows his games.

But the chart is suggesting to me that in fact too many people "know" his next moves and that they think it will be bad for DRYS in the short term.

If if it weren't for recent moves by the eCONoman, I would just write this baby off for BK as well.  Mind you, with a today's bet of less than $1k, I'm not exactly betting the farm on this.  I think of it more like a very cheap call option on oil prices which I view as being at or very close to a bottom (USO recently bottomed at $10.77 and now trades at $10.99).

DRYS used to be 100% dry bulk, then it bought a huge stake in Ocean Rig when DRYS stock was still worth something.  Since then it has been moving away from dry bulk and this is reflected in the Yahoo profile (which is quite dated as I will discuss):

"DryShips Inc. provides ocean transportation services for drybulk and petroleum cargoes, and offshore deepwater drilling services. The company operates through Drybulk, Tanker, and Drilling segments. The Drybulk segment provides drybulk commodities transportation services for the steel, electric utility, construction, and agri-food industries. The Drilling segment offers ultra deep water drilling services. The Tanker segment provides transportation services of crude and refined petroleum cargoes. As of February 25, 2015, it owned a fleet of 39 drybulk carriers comprising 13 Capesize, 24 Panamax, and 2 Supramax carriers with a combined deadweight tonnage of approximately 4.3 million tons; 10 tankers, including 4 Suezmax and 6 Aframax tankers with a combined deadweight tonnage of approximately 1.3 million tons; and 13 offshore ultra deepwater drilling units comprising 2 ultra deepwater semisubmersible drilling rigs and 11 ultra deepwater drillships."

But that was as of Feb 15th and a lot has changed since then.  ALL of the dry bulk ships have been sold and the ink on that deal wasn't even dry before DRYS turned around and bought six offshore supply vessels (OSVs).  One has to ask why DRYS is making purchases if it is about to BK!!  In BK the assets will go back to creditors who will value them at pennies on the dollar.

OK, so maybe not planned for BK after all.  But then we discover that these boats came from another Economou controlled entity and so one wonders if Economou didn't just transfer a bunch of good assets out of DRYS into another of his companies and then go ahead and buy a bunch of useless assets from himself to dump into the DRYS BK sale while piping the cash out.  This in fact might still be the case and in fact it would be my number one view except for the fact that part of the purchase of these OSVs was financed by a $50m loan agreement wherein Economou was the funder.

The circular motion of this whole thing smells a lot more like money laundering to me than anything else and if so then Economou himself will be arrested within 2 years IMO.  But what I really wanted to point out was how complex the "fundamentals" really are and that only an arrogant bozo really believes they know all of the fundamentals, the weighting of each, etc.  It's just not possible.  For example, let me add on top of the above (which all still seems somewhat negative in aggregate for DRYS at this point) the new variable that the US can be a net exporter of oil now.  I believe deepwater drilling of oil is cheaper than shale.  So now do we see the rise of the ocean drillers again?  And if so, how does that play on the need for OSVs?  Please note that after any rules change, everyone is on best behavior so as not to fuck it up.  That means that drillers will probably be parking oil spill recovery vessels right next to the rigs for a couple years in order to stop any spills from turning into a big public stink that could get this export rule overturned.

To conclude, the primary purpose of this post was to discuss the futility of trying to trade based on fundamentals because fundamentals only move the price in the very long term.  Emotions control the price in the short term and even the medium term.  My wave count indicates that DRYS just finished 3 of 5 or 5 of 5.  The 5 of 5 scenario is above and the 3 of 5 scenario is below which suggests a small rally tomorrow and Friday and then more selling into the end of the year.  Even though I only have a little in this, I will trade out if we get a weak 3 wave move up into black 4 and then look to go in even deeper if we get 5 nice waves down into black 5 per the model below.  I suspect that FCEL and DRYS will probably put in final bottoms very close to each other since their charts are so similar at this point.