As anybody who follows indices knows, the Baltic Dry Index (BDI), a measure of dry bulk commodity shipping rates, had its worst year since the 1980s in 2012. Fortunately, on December 12th, 2013, the BDI hit an all-year high at 2337.00, up from 700.00 when the index opened in 2013. In fact, it’s almost doubled from when we last covered the index in July, when it was already on an upswing. Any increases in the BDI tend to be good news for both large and small cap dry goods shipping companies, and the index itself has been used as a rough measure of economic performance for years. The Baltic Dry Index surged earlier this year as well, and it seems that the surge has some staying power, according to a recent article. The index closed December 20th at $2,208.00, up $74.00. Its 52-week trading range is $698.00 – $2,337.00.
As we’ve mentioned in the past, a rising tide lifts all ships – and in this case, it’s literal as well as metaphorical. We decided to check in with the list of small cap stocks that we’ve been following this year to see how they’re faring amidst the rising tides:
Athens, Greece-based SafeBulkers, Inc. (NYSE:SB) also hit a new high point on December 13th, following news of the BDI surge. SafeBulkers is a holding company, operating 28 drybulk vessels at an average age of 5.4 years. The company has plans to add 10 additional drybulk newbuild vessels through 2016. On November 18th of this year, SafeBulkers completed a public stock offering, raising in excess of $42 million. The company may use a portion of the proceeds to acquire more vessels. SB closed December 20th at $9.98, up $0.49, with a market cap of $791.36 million. Its 52-week trading range is $3.15 – $10.37.
Star Bulk Carriers Corp (Nasdaq:SBLK), also based in Athens, Greece, was one of the international small cap companies that saw gains from the BDI boost during its initial climb between June and September of this year. The company nearly doubled its stock price in the last two weeks of August, On December 16th, the company took possession of its first Ultramax carrier, one of two Ultramax vessels the company purchased in November of this year. Once the second ship is delivered, they will have doubled their deadweight tonnage capacity from July 2012 levels. SBLK closed December 20th at $12.34, up $1.15, with a market cap of $71.07 million. Its 52-week trading range is $5.28 – $13.43.
Athens, Greece-based Paragon Shipping Inc. * (NYSE:PRGN) announced on December 9th its plans to cancel one of its two newbuild contracts and transfer the balance to the second ship, then purchase two Eco-Design Ultramax newbuilding drybulk carriers. This maneuver allows the company to immediately fund 42% of the carrier to be sold (the company granted the option to purchase to Box Ships Inc) and take delivery of the containership for little to no equity. A recent article at SeekingAlpha explains the maneuver more fully. PRGN closed December 20th at $7.10, up $0.63, with a market cap of $78.55 million. Its 52-week trading range is $1.98 – $9.40.
Navios Maritime Holdings Inc (NYSE:NM), based in Piraeus, Greece, has been on a mostly steady upward climb for all of 2013. The company both owns ships and charters them, and also has tanker and logistics business divisions. The company recently closed an offering of $650 million in first priority ship mortgage notes due in 2022. The company also took possession of four additional Panamax ships earlier this year, growing their total fleet to more than 50 vessels. NM closed December 20th at $9.86, up $0.32, with a market cap of $1.06 billion. Its 52-week trading range is $3.26 – $10.60.
Although there’s been plenty of excitement around the growth of the BDI this year, that excitement appears to be justified. After all, the mid-year surge led to higher prices even after it died down, and companies are surging yet again into 2014. Investors interested in dry bulk shipping small caps may do well to climb aboard before this ship sets sail – perhaps for good.