TOP SHIPS Inc (NASDAQ: TOPS) has been an interesting stock to watch as of late. With a dramatic run toward the top recently, the stock is taking a bit of a dive today. In fact, the stock is falling so hard that it was the subject of an alert from our partners at Trade Ideas! At the moment (10:58), TOPS is trading at $1.94 per share after a decline of $0.13 per share (6.52%) thus far today. With the declines, many are wondering if they should buy the dip.
Before we get too into the details here, I’ll answer that question. While it’s up to you to do your own due diligence, and it is always advised to speak with your financial advisor, in this case, make sure you dig deep before you get involved. There are several points of concern to consider before making an investment in TOPS. Today, we’ll talk about:
- What Top Ships does;
- why you should be very cautious here;
- recent signs that the company’s management’s interests may be aligning with investors’;
- risks to consider; and
- what to watch for ahead.
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What TOPS Does
Top Ships is a dry bulk shipper headquartered in Marousi, Greece. Currently, the company has a 14 vessel fleet of modern, fuel-efficient “ECO” tankers. The company’s strategy is to grow this fleet via acquisitions of newly built vessels, resale vessels, or secondhand vessels. On their website, the company pointed out that it is only interested in vessels with a superior ECO design.
Why You Should Be Very Cautious With Greek Dry Bulk Shippers
If there is one industry that I would personally stay away from at the moment, it’s Greek dry bulk shippers. Of course, this includes TOPS, but it also includes companies like DryShips, Seanergy Maritime Holdings, and others. At the end of the day, over the last several years, these companies have been battered financially due to poor market conditions.
As a result of the financial struggles that these companies have faced, they have made many moves that have not been in the best interest of shareholders. Essentially, when in need of funding, these companies horribly dilute shares and have a history of working with less than savory funding providers.
For a good example of this, take a look at the relationships that these companies have had with Kalani Investments. Ultimately, Kalani buys shares at a ridiculous discount before dumping them on the public, generating significant losses for public investors in the process. I would go into more detail on this, but Research & Investment at Seeking Alpha already has. So, I would strongly suggest reading the post here!
Recent Signs That Management May Be Doing The Right Thing
Recently, TOPS found its way toward the top in the market after making an announcement that seemed to align its interests with investor interests. In a recent press release, the company announced that it didn’t have any plans to raise any more capital over the next 12 months. Considering that capital raises have historically been at the cost of investors, this was overwhelmingly positive news, leading to strong gains in the stock.
In the release, the company also announced that the CEO of the company, Evangelos Pistiolis, will not convert any of his 1.25 million warrants as part of a standstill agreement. This agreement also ensures that Pistiolis will not sell any of his shares for the same 12-month period.
Considering the company’s history of capital raises and Pistiolis’ history of making himself richer at the cost of investor returns, this proved to be overwhelmingly positive news. However, things aren’t always as they seem. So, I would still strongly suggest being careful here.