Do They Know It's Christmas Time for ...

The BDI closed at 8536, up another 1.58%!



And yet the leading stock, Maybulk, in this sector has done absolutely nothing!

Maybulk closed yesterday trading flat at 4.10.



Truly amazing!

Well is this an opportunity or is this an trap? Trap? The below is a snapshot of Maybulk's segmental earnings.



How?

Interestingly enough, if one reads the earnings notes, this was what's said by the company in regards to the company's future prospects.

• PROSPECTS
  
  Since achieving a historical peak of 11,039 on 13 November 2007, the BDI has declined by more than 30%. Charterers’ suspension of cargo shipments in an effort to reduce port congestion, bad weather closing ports and mines affected cargo availability. Furthermore the annual iron ore price negotiations between China and the major suppliers resulted in significant decline of iron ore shipments. These adversely affected the cape-size market and the resultant negative influence across the freight market. However, the declining BDI against the backdrop of a global weakening equity market, the subprime mortgage woes, a tightening credit market in reaction to the subprime crisis and heightened concerns over the state of the United States’ economy is clearly exacerbating the negative market sentiment....

Yes, since hitting the peak, the index for the Baltic Dry Index had tumbled. And as stated precisely, cargo shipments were indeed impacted by bad weather condition (severe snow storms in China to be precise) and this had put a huge damper in the charter rates. However, at this moment of time, this has clearly passed. The charter rates had certainly rebounded extremely strongly and as can seen above, the BDI closed at 8536.

Yes, the plunge of the BDI from 11k has spooked the shipping shares. The index fell to a low of a 5615 on Jan 29th 2008.

But the BDI is now at 8536!

Oh, that's a recovery of some 2921 points or a whopping 52% from its Jan 29th lows!

How?

Do you reckon that Maybulk, whose earnings depending heavily on the index, should rate much higher?

Ah yes, if you read Maybulk's earnings, there's a proposed 30 sen dividend. And if you use historical fiscal years as an indicator, Maybulk's dividend should go ex in April and payment would be made in May.