This will just be a quick post to go more into detail about last week’s trades.
First off: I sold out of BEP (S&P500 Covered Call Fund). I fully admit this ETF didn’t hedge downside in any way I expected. And by that I mean it didn’t hedge downside at all. If the market went up, it underperformed, if the market went down it underperformed. Very frustrating, because at least the way I looked at it it’s supposed to do well when it’s an uncertain, not too strong bull market (people want to buy calls, but don’t want to commit by buying stocks). Which has pretty much been the situation since it’s been in the portfolio.
Diana like I keep repeating is a company and stock I really love and barring some catastrophe will be in the portfolio at the end of the year. The main reason I sold out of it was a quasi-trading play, because the day after it rose to 16% on a day of extremely positive trading I was pretty sure some would cash out their gains. Hence, I sold it that night, DSX did indeed fall slightly the next day and I repurchased it at that price. It wasn’t value fare admittedly, but at this point any outperformance is valuable.
However, to quickly renumerate just how strong Diana is – it has a pristine balance sheet (23% leverage vs 90-150% for almost every other shipper), meaning even now it can raise debt very cheaply and easily. It has a substantial cash position, enough to straight out buy 4 more capesize vessels. But with 50/50 it easily has the ability to purchase up to 8 if necessary. On top of that, they have a 99.7% fleet utilization rate (only .2% dropoff from last year) and an average age of 5 years on its fleet meaning very low maintenance and upgrading costs moving forward. And it has a number of charters coming off in the next few months so they can take advantage of the surging BDI.
