"The rise of the shipping penny stock"

We've looked at this nasty phenomena a few times, most notably when we linked to the FT's Paul Murphy on Dryships:

From FT Alphaville:

Who buys DRYS?
By: Paul Murphy

Idiots, obviously

And today's installment, from FreightWaves, July 15:

Shipowners with shares worth pennies rake in millions
The rise of the shipping penny stock

“How much percentage of a play can there be altogether?” Max Bialystok asked his accountant Leo Bloom in the movie “The Producers.”
“Max, you can only sell 100% of anything,” said Bloom.
“And how much of ‘Springtime for Hitler’ have we sold?” wondered Bialystok.
Bloom: “25,000%.”

Of course, it’s illegal to sell more than 100% of anything at once. But you can sell more than 100% of existing shares by increasing the total number of shares.
A lot more.

The key is to find enough buyers who don’t care they’re getting a smaller slice of an ever-expanding pie — the kind who are not investing in future profit streams but buying stocks as if they were lottery tickets or casino chips.

Welcome to ocean-shipping capital markets circa 2020.

Stock offerings pile up
The shipping penny stocks — the listed owners with shares that usually trade under a dollar — are now in high demand among day traders, particularly as the coronavirus crisis inflates retail trading volumes. Retail demand has allowed micro-cap shipping companies to sell highly dilutive equity to fund vessel acquisitions.

Top Ships (NASDAQ: TOPS), Seanergy (NASDAQ: SHIP), Castor Maritime (NASDAQ: CTRM) and Globus Maritime (NASDAQ: GLBS) have raised combined net proceeds of $202 million since February, including one offering that has yet to close.

 

Based on data from company securities filings

To put this in perspective, the aggregate market cap of these four companies — what the stock market deems they’re worth — was only around $160 million as of Wednesday.

There have been 21 equity sales by these four companies so far, all handled by New York investment bank Maxim Group, which served as either underwriter or placement agent. Aggregate placement, underwriting and other fees total $14.1 million.

Penny stocks have dominated overall shipping equity offerings in New York in 2020. The only other common equity sales have been by Scorpio Bulkers (NASDAQ: SALT), for net proceeds of $71.9 million, and a private placement by GasLog Ltd. (NYSE: GLOG) for $36 million.

Top Ships leads the pack
Tanker owner Top Ships, founded by Evangelos Pistiolis, is the reigning king of shipping penny-stock capital raising (now that George Economou’s DryShips is no longer public)....

....MUCH MORE

And most recently in Phi Scamma Jamma: "A lost decade for shipping stocks"