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Shippers On A Run Again Amid No News

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Shippers On A Run Again Amid No News

Shipping stocks were trading notably higher on Friday on minimal news.

The only notable news release that would affect the group was a press release by Diana Shipping Inc. (NYSE: DSX), in which the global shipping company specializing in the ownership of dry bulk vessels entered into a time charter contract with Koch Shipping Pte. Ltd., Singapore for one of its capesize dry bulk vessels, the m/v P. S. Palios.

Ironically, Diana Shipping's stock is among the few shipping names trading in the red, as shares were lower by 0.26 percent at $3.79.

Globus Maritime Ltd (NASDAQ: GLBS) led all shipping companies higher as the stock gained more than 135 percent on Friday before a halt to the stock kicked in at 11:21 a.m. ET.

Globus Maritime's investor relations website showed no new press releases and the company's presentations page hasn't seen any new entries since December, 2015.

Here is a roundup of other shipping companies with notable gains that can't be attributed to any company specific news:

  • Diana Containerships Inc (NASDAQ: DCIX): $3.23, up 20.52 percent.
  • Euroseas Ltd. (NASDAQ: ESEA): $1.77, up 10.66 percent.
  • Paragon Shipping Inc. (OTC: PRGNF): $0.12, up 12.15 percent.
  • Star Bulk Carriers Corp. (NASDAQ: SBLK): $7.17, up 6.86 percent.

Deja Vu

The shipping sector dominated headlines back in November 2016 when a relatively unknown shipping company called DryShips Inc. (NASDAQ: DRYS) traded from under $4 a share to above $100 and then back to below $10 within just days. On Friday, the stock hit a 52-week low of $1.69 but shortly after 12:00 p.m. ET the stock was higher by more than 14 percent on the day at $2.10.

As Benzinga previously explained, the combination of a high short interest and low float creates a cocktail as volatile and explosive as nitroglycerine.

When a short squeeze occurs in a typical stock, short sellers can cut their losses by throwing in the towel and covering at any point. However, when a stock has a low float, brokers may not have shares available to allow traders to close out their short positions at all.

It is possible that a short squeeze could be at play. Many investors profited greatly from DryShip's $100 per share gain but many investors were unfortunately caught on the other side of the trade.

Needless to say, buyers beware.

 

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