Knobias Clip Report (10-10-2007)

Sumbmited From Knobias ClipReport

Small Cap Dry Bulk Shippers Gain Momentum

Wednesday’s session saw the Dow lose 85 points as one of its main components announced delays on their newest product. Boeing announced a delay on their 787 Dreamliner airplane causing shares to fall 2.73%. Also contributing to the slide was disappointing earnings results with many analysts expecting the market to give up 3-5% over the course of the season on slower earnings growth based on early reporters.

Monsanto and Alcoa reported earnings lower than expected while Chevron announced that it would miss their third quarter guidance expectations. Costco Wholesale Corp was one of the Company’s who surprised with a profit rise of 4.7%, topping analyst forecasts.

In the small cap space, a couple of names saw an increase in buying and volume attracting many momentum players. FreeSeas, Inc. (FREE) shares, spiked during the afternoon half of the session, reaching a high of $10.40 on no news. The stock closed at $10.24, up 30%, on 1.62 million shares traded. The Company is a commercial shipping company that operates Handysize and Handymax vessels in the drybulk markets. FreeSeas' vessels carry a variety of drybulk commodities, including coal, iron ore, and grains, or major bulks, as well as bauxite, phosphate, fertilizers and steel products, or minor bulks.

The Company recently released earnings which showed year over year growth, though shares lost over 11% over the following days after the announcement. Earnings displayed that revenue grew by 19.3% over the same quarter of 2006 and by 44.2% for the first half of 2007 over first half of 2006.

Net income for the second quarter improved to $1.71 million, compared to a loss of $0.6 million in the same quarter of 2006 or $0.27 per share, based on 6,290,100 basic shares outstanding, compared to $0.10 loss per share in same quarter 2006. Net income for the first half of 2007 reached $2.62 million compared to a loss of $2.26 million in the first half of 2006, or $0.42 per share as of June 30, 2007 as compared to $0.36 loss per share for the same period in 2006.

On September 27th, the Company announced that the M/V Free Jupiter would undergo an unscheduled dry-docking to complete repairs following a grounding incident on September 21, 2007 off the coast of the Philippines. The dry-docking was expected to take place after the refloating of the vessel and completion of the current trip charter. The Company expected that the vessel's repairs and related expenses would be covered by the vessel's insurance.

The Company also announced that the M/V Free Destiny had been chartered at a rate of $28,000 per day on a spot charter of approximately 70 days. The addition of $1.96 million in revenue could be the reason for the shares to have received the added attention.

Another name in the space also saw increased volume as also being a dry bulk carrier. B&H Carrier Limited (BHO) currently owns and operates three IMO Type 2&3 Product / Chemical Carriers, three Medium Range Product Tankers, two Panamax Product Tankers and seven Combination Carriers. The seven Combination Carriers include one recently acquired vessel which the Company holds a 50% interest.

On Wednesday, shares gained 12% on 268 thousand shares traded. Along with FREE, BHO received the added addition on no news. With earnings from both of these names just around the corner, investors would be wise to watch.



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