Wednesday, March 6, 2013

Into Shipping

It's a risky business, I know. But Jim Cramer recommended Diana Shipping (DSX) as a play on increasing international trade. That made me thinking.
I don't actually like DSX. It's specialty is bulk carriers. There are two problems here, both originated in China. First, China is trying to switch from raw material intensive economy to more efficient one. That means less raw materials (or at least not much increase in use). Another problem: in the last decade shipbuilders built way too many bulk carriers. DSX is a quite efficient company, but it's working on the saturated market. Not much potential here. No wonder DSX doesn't pay any dividends.
But there is another play on the international trade. Most of the trade goods are shipped in containers. Container shipping is increasing faster than bulk shipping, and potential for growth in here.
Decision came easy. Diana Containerships (DCIX) is a sister company of DSX. As the case with DSX, company is very transparent. On company's web site you can find information on current and future ship leases. Company's financials are in good shape, profits are increasing and dividend is stunning 18%.
I opened position in DCIX today. If stock falls down more, I will increase this position.
This is a risky investment, I wouldn't recommend it as a part of conservative portfolio. But my portfolio (except for the fixed income part) is quite risky anyway. That's why I don't recommend anybody piggibacking on my investment decisions. If you do, it's your risk, not mine.
Disclosure: I am long DCIX.
Additional disclosure: I have no positions in DSX. Positions can change any time.

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