Top Ships Inc (NASDAQ: TOPS) is having an incredibly strong start to the trading session this morning. When our partners at Trade Ideas alerted us to the gains, we went digging to see what was happening. However, the company hasn’t released any news. At the end of the day, shipping stocks make these runs often. Today, we’ll talk about what we’re seeing from the stock, what you need to know about TOPS, and what we’ll be watching for ahead.
TOPS Makes A Run For The Top
As mentioned above, Top Ships is having an overwhelmingly strong start to the trading session this morning. As indicators light up on trader screens, the stock is being pushed toward the top. At the moment (9:31), TOPS is trading at $0.71 per share after a gain of $0.17 per share or 31.22% thus far today.
This Is No Surprise
While there has been no news released by TOPS and the stock is running for the top, I’m not surprised. The reality is that we see these types of runs in the shipping sector all the time thanks to the volatile nature of the sector. Nonetheless, if you’re thinking about trading, by all means, do it! However, keep the volatility of the sector in mind and don’t hesitate when it’s time to exit because this thing will likely fall back down, and when it does, it will be a hard fall. However, if you’re thinking about going long with an investment in Top Ships, you may want to reconsider.
The reality is that the shipping sector has struggled for several years, about 9 years in fact. About 9 years ago, we started to watch as the bulk shipping sector felt the pain of the high cost of infrastructure growth with massive acquisitions at the time. From there, the sector continued to fall as shipping prices decreased thanks to reductions in demand as a result of low commodity prices. Through the past 9 years, the struggles have largely pushed companies stocks like TOPS, DRYS, DCIX, and SHIP to move forward with death spiral financing, keeping the company afloat at the cost of dilution and investor losses.
While the shipping sector seems to be going through a recovery at the moment, most of these companies, including TOPS, are still dealing with bad financial decisions. As a result, they are likely going to have to raise more funds ahead, leading to further dilution and further declines.
To make matters worse, Top Ships and companies like it haven’t acted in the best interest of shareholders over the years. Many of these Greek shipping companies have worked with Kalani Investments and other firms who have used the stocks like an ATM at the cost of investors. Sadly, because of where these companies are incorporated, laws surrounding fiduciary responsibility to investors are cloudy at best, making it difficult for investors to find a way to fight back when they are done wrong.
Considering the historic moves of TOPS and others in the sector, even with the shipping sector improving, we can expect to see moves made that are not in the best interest of investors. So, once again, if you’re thinking about investing, please consider doing some digging and looking into the financial data and financial history of the company before you pull the trigger on purchasing a position.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on TOPS, as well as the rest of the shipping industry as many of these stocks are climbing. In particular, we’re interested in seeing if the company takes advantage of the changing tides in the shipping sector and can find a way to recover without causing pain for investors in the process. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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