Got Back Into DryShips (DRYS)

We bought back into DryShips (DRYS) yesterday at $6.94. We had sold all our shares of DryShips (DRYS) at a slight loss on 1/28/2009 at $8.96. Since that sale, several factors combined to give a slightly positive overall development on DryShips while the stock price plummeted close to 25%:

1. The Baltic Dry Index (BDI) doubled during the period from 1/22/2009 through today 02/09/2009. The Chinese & US stimulus packages and associated speculation is part of the reason for this rebound. The other reason is that the BDI was artificially low due to very low demand from China prior to their new year.
2. Uncertainties surrounding the news about breaching loan covenants is starting to clear – DryShips reached tentative loan covenant waiver agreements with two of their lenders ($1.02B loan total of which $815M is outstanding).

Uncertainty surrounding earnings, the timing of new stock sales and Primelead spin-off (the Primelead loan covenant waiver agreement has a provision that makes it necessary to get approval from lenders to acquire two other DrillShip hulls unless the loan has been repaid to below $375M) are combining to keep share price down. Even so, if the BDI continues to rise, DryShips share price will eventually have to follow suit.

Following these transactions, our cash position has dropped to 7.9% of our total portfolio value.

Below is our updated portfolio:

Stock	Buy Date	Buy Price	Current Price	Current % Of Portfolio	Unrealized % Return	Yield as % of BOY Portfolio Value Plus Deposits
Altria (MO)	Various	16.69	16.81	4.58	0.75	0.16
Philip Morris International (PM)	1/4/2005	32.19	36.72	7.24	14.06	0.23
Kraft Foods (KFT)	Various	24.03	25.88	4.70	7.68	0.11
Pfizer (PFE)	Various	24.37	14.71	6.68	(39.63)	0.33
ICICI Bank (IBN)	5/18/2006 and 08/01/2008	25.28	18.16	8.25	(28.15)	0.17
Taiwan Semi (TSM) – Call Value	7/27/2006	8.71	7.50	6.81	(13.77)	0.24
Advantage Energy Fund (AAV)	11/2/2006	11.22	3.63	1.65	(67.66)	0.22
Central Europe & Russia Fund (CEE)	Various	39.23	15.06	4.79	(61.61)	1.85
Patni Computers (PTI)	8/10/2007	20.85	5.82	2.64	(72.11)	0.03
Itron Inc. (ITRI)	11/07/2007	85.01	59.29	5.39	(30.34)	None
Anthracite (AHR)	11/09/2007	7.97	1.71	0.78	(78.54)	0.35
ClickSoftware (CKSW)	11/09/2007	4.61	2.68	2.43	(41.86)	None
Harvest Energy (HTE)	11/28/2007	21.01	7.76	2.82	(63.07)	0.45
iRobot (IRBT)	12/18/2007	18.65	8.04	2.92	(56.52)	None
LDK Solar (LDK)	01/22/2008	30.49	11.15	3.04	(63.43)	None
Aegon N.V. (AEG)	04/28/2008	15.99	5.91	1.61	(63.03)	0.24
LM Ericsson (ERIC) – Call Value	05/05/2008	11.83	7.50	5.45	(36.59)	0.20
TD Ameritrade (AMTD)	05/21/2008	17.68	13.47	4.90	(23.83)	None
Trina Solar (TSL)	06/06/08, 07/31/08, 01/23/09	24.78	8.35	3.79	(66.39)	None
Costco (COST)	08/01/2008	62.28	45.17	4.10	(27.47)	0.03
Frontline Limited (FRO)	10/06/2008	36.95	29.10	3.97	(21.22)	0.41
DryShips Limited (DRYS)	02/09/2008	6.96	6.50	4.13	(6.66)	0
Cash				7.88
Total Portfolio					(39.08)	5.46

• For Altria and Philip Morris International, assumed spin-off ratio of 30.83:69.17. Altria is yet to supply the cost-basis info
• The yield column is current as of 11/21/2008.
• For Taiwan Semi (TSM), we wrote Feb 7.5 covered calls on them on 01/05/2009.
• For LM Ericsson Telephone Company (ERIC), we wrote Apr 7.5 covered calls on them on 01/21/2009.