Andrew Feldstein and Stephen Siderow‘s BlueMountain Capital Management is betting big on the shipping industry, judging by its latest filings. In a new filing with the Securities and Exchange Commission, BlueMountain revealed a new position in DryShips Inc. (NASDAQ:DRYS), which amasses around 71.43 million shares, which represent 10.4% of the company. The stake is passive by nature.
DryShips Inc. (NASDAQ:DRYS)’ stock declined by over 68% since the beginning of the year. The decline came in the whole shipping & ports industry, which went through some troubles lately, caused by an excess of supply as argued by some experts. In September, BlueMountain reported raising its stake in Scorpio Bulkers Inc (NYSE:SALT) to 9.92 million shares, equal to 7.1% of the company. In August, the fund reported holding around 57.5 million shares of Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ)‘s class A common stock, including warrants, the position representing 18.4% of the company’s class A stock.
BlueMountain is a hedge fund that follows a relative value strategy and focuses on credit and equity derivatives markets. The fund has an equity portfolio of around $5.9 billion spread among various sectors and industries.
The investor added the company to the equity portfolio amid the company conducting a public offering of 250 million of its common shares at $1.40 per unity. The net proceeds, worth around $333 million will be used to reduce the company’s debt. Moreover, a couple of weeks ago, DryShips announced some of its latest developments such as securing $120 million in liquidity from its subsidiary, Ocean Rig, which will also be used to repay some of the company’s debt. DryShips Inc. (NASDAQ:DRYS) also declared its third consecutive dividend of $0.19 per share for the third quarter of 2014.
Another investor betting on DryShips Inc. (NASDAQ:DRYS) is Steve Cohen, whose fund, Point72 Asset Management, reported a new stake in the company for the end of the second quarter, which contains around 2.46 million shares. Richard Chilton‘s Chilton Investment Company held some 2.21 million shares at the end of June.
In fact, we have seen some activity around the shipping industry recently. Only a couple of days ago, Howard Marks‘ Oaktree Capital Management reported a new position in Eagle Bulk Shipping Inc. (NASDAQ:EGLE), which amasses almost 42% of the company. Oaktree disclosed its stake amid the company completing its financial restructuring and issuing new equity. In this way, it looks like the industry might be out of woods and investors are betting on that. Aside from Eagle Bulk Shipping, the aforementioned Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ), filed for chapter 11 bankruptcy in 2012, and emerged from it earlier this year. Genco Shipping & Trading Limited (OTCMKTS:GNKOQ) filed for bankruptcy in April.
With this in mind, with hedge funds becoming active around shipping stocks, it might be a good time for smaller investors to explore them as investment opportunities. Especially since these stocks are relatively cheap at the moment.
Disclosure: none
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