How 'Unscathed' are Greek Shipping Stocks?

DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), and FreeSeas Inc (FREE) have made major moves in 2015

Aug 7, 2015 at 11:41 AM
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A recent article in The Wall Street Journal (subscription required) highlighted the Greek shipping industry, which it says has "emerged largely unscathed" from the nation's recent financial troubles. The author points out Greece-based shipping companies are buying vessels from cash-strapped competitors and German banks, and are poised to grab even more market share -- but bailout-related tax hikes could lead shipowners to seek cheaper waters. Against this backdrop, we decided to check in on Greek shipping stocks -- including DryShips Inc. (NASDAQ:DRYS), Diana Shipping Inc. (NYSE:DSX), and FreeSeas Inc (NASDAQ:FREE) -- which have hardly set the world on fire.

DRYS, for one, is getting destroyed today, down 5.7% at $0.52 -- and just pennies above its record low of $0.49 -- on lackluster earnings. In fact, the stock has lost more than half of its value in 2015, pressured lower by its 50-day moving average. Not surprisingly, 80% of analysts rate the security a "hold" or worse. However, future price-target cuts could result in additional headwinds, as DryShips Inc.'s consensus 12-month price target of $0.94 stands at an 81% premium to its current perch.

Conversely, DSX is faring much better, up 1.3% at $7.64 -- and nearly 14% higher year-to-date. Option traders have been gambling on upside in recent months, too. The stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio stands at a top-heavy 18.36 -- and near the top quartile of its annual range. In other words, call buyers have been more active than usual on Diana Shipping Inc. Not everyone's a fan, though, as short interest levels remain relatively high.

Finally, FREE is up 3% at midday at $0.52, but has lost an incredible 98.5% of its value this year. Short sellers are kicking the stock while its down. During the most recent reporting period, short interest on FreeSeas Inc more than tripled -- yet, at average daily trading levels, it would take less than a day to buy back these shorted shares.
 

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