Dry Bulk Shippers: No Strangers To Volatility

Dry shipping stocks have been on fire since the election, led by DryShips Inc. DRYS.

DryShips has experienced one of the most spectacular shot squeezes of all time, gaining more than 2,000 percent in just over a week. The stock was halted in pre-market trading on Wednesday. According to Zero Hedge, the Nasdaq requested the halt following an “information request” related to DryShips.

Other shipping stocks have delivered major post-election gains on a slightly more reasonable scale:

• Euroseas Ltd. ESEA is up 350 percent.
• Eagle Bulk Shipping Inc EGLE is up 135 percent.
• Diana Containerships Inc DCIX is up 276 percent.
• TOP SHIPS Inc TOPS is up 171 percent.
• Danaos Corporation DAC is up 76 percent.
• Global Ship Lease Inc GSL is up 73.7 percent.
• Diana Shipping Inc DSX is up 73.4 percent.
• StealthGas Inc. GASS is up 41 percent.

Shipping stocks have traded up in response to the Baltic Dry Index spiking to its highest level since 2014 following the election.

However, there seems to be more at play for many of these shipping stocks. Prior to the election, the eight stocks mentioned above were all down between 18.8 percent and 98.1 percent in 2016. Not surprisingly, DryShips was the -98.1 percent performer.

This major underperformance suggests that all of the shipping stocks were heavily shorted throughout the year.

Dry shipping stocks are certainly no strangers to volatility. All eight of these shipping stocks have a beta greater than 1.0. DryShips’ beta is 3.2.