Thursday, February 19, 2009

Diana Shipping (DSX): discipline and prudence pays off in a bear market

Diana (DSX) stands out as one of the most conservative and prudent players in the dry bulk sector. They kept strict rules on fleet expansion and debt levels in the boom times. They maintain good corporate governance rules and transparency with shareholders. They have a competitive advantage over many peer companies.

Simos Palios, CEO of DSX, is an old shipping hand in the Greek community with a successful investor track record. Palios has always had outside investors in his private company prior to moving to capital markets.

His public company DSX has strict corporate governance rules that exceed most peer companies in quality. Keeping with this spirit, DSX has a CFO with multinational corporate experience. Unlike many peer dry cargo companies, DSX is very straightforward on fleet employment, maintaining full details on the company website.

DSX maintains a conservative chartering policy and currently has it fleet 90% contracted with a diverse group of charterers.

During the boom times, DSX refrained from massive block fleet expansion deals. The company prudently financed fleet renewal by taking profits and selling older units and replaced them with newer units. Its newbuilding orderbook is small - only two Capesize on order from 2006 at fairly decent prices. Its debt load is very moderate.

DSX is well positioned to expand its fleet at bargain prices, but not likely to make big moves.

Very bearish dry cargo analyst, Martin Sommerseth Jaer, of Oslo-based investment bank Arctic Securities, singles out DSX as one of the few companies in the sector where he feels confidence.

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