I think people buy and sell this stock just as a gamble, because the price does not reflect the value, but it continues to go up.
I am not the only one who believes the stock is overvalued.
Martin Sommerseth Jaer, who follows DryShips for Arctic Securities and has a “sell” rating on the shipowner’s stock, says today’s announcement is not a surprise.
He told TradeWinds: “If you look at the extreme leverage in the company, this is an obvious outcome. The equity market is willing to purchase overpriced DryShips shares so why not issue stock?
“It is selling a dime for a dollar and, interestingly, the more dimes it sells for a dollar the more accretive it is for to previous shareholders as it aids net asset value."
This is because the equity is being raised at share price levels above underlying NAV, he explains.
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