Oceanfreight (OCNF – Nasdaq)

Dear Bottarelli Research Member,

Continued credit worries, combined with an intra-week Fed meeting, have fueled another volatile week of trading. For example, the Dow has moved over 100 points in 12 out of the last 15 trading days, and this rapid level of price movement is simply unsustainable. Keep in mind that the Dow hit an all time high at 14,000 this year, and the follow-on move looks like any standard correction. And as the dust settles, we’re left with a remarkable opportunity to add a new small-cap position that Bryan and I have both been anxious to buy on any dips. I’ll get to this exciting new pick in just a moment, but first I have some quick position updates:

JA Solar Holdings (JASO — NASDAQ) and Solarfun Power Holdings (SOLF – NASDAQ): Both solar stocks have witnessed strong rallies this week, sparked by Q2 earnings from JASO that more than quadrupled from a year-ago. My advice to re-buy (or add to your JASO position) at $30.00 was right on the money, as this level proved to be the near-term floor. This points to continued price increases, so with the solar market continuing to experience rapid expansion around the globe, I would use any dips on both SOLF and JASO to add to your positions.

Boots & Coots International Well Control (WEL – AMEX): As I’m sure you know, WEL reported earnings that were not as good as expected — due primarily to delays in the Gulf of Mexico and South America. But shortly after reporting these results, they came out with a new $21 million contract in Algeria, which is pretty big news. So at this point, we have to decide if this is the bottom. I believe that the answer is “yes.” Shares could very well turn around from here, so I’m sticking my neck out and recommending that you hold WEL. I have seen this type of action too many times in the past, only to see shares blast much higher a few months later — so I recommend that we keep holding WEL.

WorldWater & Power (WWAT.OB): After the huge run-up, the stock has pulled back a little bit, but I’m not too concerned. Like I had mentioned before, WWAT is a company that’s growing very fast, and I feel the upside is just in the beginning stages. This stock has legs, and I definitely want you to maintain your WWAT position for more gains.

Parker Drilling (PKD – NYSE): I firmly believe that the shares have now established a floor. The global drilling contractor and service provider just reported a 32% increase in Q2 income thanks to high utilization and record dayrates for deep drilling rigs. With rates at the Gulf of Mexico rising 28% to a record of $51,600 per day, there is no reason why shares have fallen so much. The stock is grossly oversold and I’ll stand firmly behind my recommendation in this company.

Star Maritime Acquisition (SEA – AMEX): As you’ll read in today’s alert, dry bulk shipping continues to be a sector you need to overweight, and SEA is the right company to ride the global expansion. In fact, SEA is one of two dry bulk shipping stocks that you need to own, and now that the timing is right, we’re going to add the second position to our small-cap ledger. This new company just reported great earnings, they’re expanding their fleet, and they’ve already turned a profit. In fact, they just paid first dividend — and best of all this company is still a Wall Street secret because they just went public in April! This young and aggressive dry shipper is getting $4,000.00 more per day than they had previously expected on their leases, and that’s why we need to add this position now, while the markets are giving us this chance.

This week, your small-cap pick is a company called Oceanfreight (OCNF – NASDAQ), and let’s buy the shares under $22.00. This could also be another one that takes off like DryShips (DRYS – NASDAQ) and we want to be invested before the boat leaves the port.

I’ll turn it over to Bryan and let him give you the full details.

Have a great week everyone.

Sincerely,

P.S. Before I go, I wanted to quickly follow up on Bryan’s newest options report titled “Buying With Blood in the Streets: A Once-in-a-Decade Opportunity to Play a Housing Rebound by January 2010.”

In case you missed it last week, Bryan has uncovered an investment opportunity that could get you positioned for a real estate turnaround for literally no risk. I fully back Bryan in his thinking, and this play has the ability to make you 3x to 4x your money if the U.S. housing sector rebounds anytime between now and January of 2010. As a homebuilder myself, I highly I recommend that you jump on this remarkable opportunity now!

DON’T FORGET: You only have 3 trading days left to join Bottarelli Research Options for a special discounted price, so now is the best time to upgrade your Small Cap membership and add Bottarelli Research Options to your investing arsenal. With crisis comes tremendous opportunity — and investment situations like this come about once every decade. Please don’t miss it. Join Bottarelli Research Options for our special discounted price and you’ll gain immediate access to this entire investment strategy. To lock in your space, click below:

JA Solar (JASO – NASDAQ) Implemented this Strategy, and the Stock Gained 86% From our June 11^th Entry. Now, Oceanfreight (OCNF – NASDAQ) is Adopting this Same Strategy, and the Opportunity for Similar Gains are Available Once Again.

Founded in 2006 and is based in Athens, Greece, Oceanfreight (OCNF – NASDAQ) has a business model that involves acquiring a fleet of second-hand dry bulk carriers and transporting commodities by sea.

If you believe, like I do, that the growth of world trade is only in the beginning stages of a multi-year uptrend (fueled especially by India and China), then owning a newly-listed dry bulk shipping company like Oceanfreight (OCNF – NASDAQ) is a fantastic way to profit off this continuous trend.

As a quick review, our first dry bulk small-cap recommendation came on Friday, July 27^th and featured a company called Star Maritime Acquisition (SEA – AMEX).Now, as the second part of this investing theme, we’d like to add OCNF to our ledger as well. What separates OCNF from SEA? I’ll tell you in just a moment. But first, let me give you a quick refresher on the dry bulk investment thesis:

There are three types of ships that carry bulk cargo: Container ships, tankers, and dry-bulk shippers. While globalization has made every shipping company a great investment, dry bulk shipping is red hot because commodities like iron ore and coal are shipped between rapidly-developing countries in increasingly high amounts.

With commodity demand from China and India driving unprecedented business growth, dry bulk ships can bill upwards of $95,000 per day even though it costs them under $10,000 per day to operate. And since they get paid by the day, the longer the trip, the more revenue they earn. The result is windfall profits for dry bulk operators! And when you consider that shipyards are backlogged with orders until 2009, the dry bulk investment thesis is simple to grasp — and that’s why we recommended SEA on July 27^th.

Now, the reason I’d like to add OCNF to our ledger is they’re applying the same successful IPO cash management model as JASO. If you recall, JASO went public in February of 2007 and used the proceeds of their IPO to lock up polysilicon (in the form of pre-payments) that allowed them to control the raw commodity for the next 12 to 18 months. This helped JASO leverage the increasing global demand for solar panels, and, as a result, their Q2 revenues just quadrupled. JASO has gained as much as 86.24% from our June 11^th entry price.

Although they’re in completely different businesses, OCNF is applying the same success formula to their newly public company. That is, they’re applying the revenues they gained from their IPO to rapidly expand their dry bulk fleet — and this savvy investment should be the catalyst that drives their stock price higher over the next 12-18 months.

You see, OceanFreight priced 10.75 million shares at $19.00 and raised $204.3 million on their IPO. As you can see below, the stock opened at $19.00 and currently trades for $20.16.

Unlike technology IPOs from the bubble years (where IPO cash was used by the 22-year old CEO to buy himself a new Mercedes Benz and to buy a new foosball table for the office), OCNF is putting their IPO proceeds immediately to work. You see, they’re financing a $312 million agreement for seven second-hand dry bulk vessels, and they’re also planning to pay an annual dividend of $2.05 a share. Since Antonios Kandylidis (the son of OCNF director Konstandinos Kandylidis) is a principal shareholder in the firm, you better believe that the controlling family’s primary goal is to reward early shareholders like you and me.

But here’s where the story heats up: As you read this, OCNF has a dry bulk fleet comprised of six Panamax dry bulk carriers and one Capesize dry bulk carrier.

A Panamax carrier is one that contains the maximum dimensions that will fit through the locks of the Panama Canal (size determined by the dimensions of the lock chambers, depth of the water in the canal, etc.). Panamax is a significant factor in the design of cargo ships, and OCNF is the leading owner and operator of six Panamax bulk carriers.

This gives them a stronghold on a dry bulk market niche that’s a key geographic location to global shipping. In fact, as you can see from the image below, the locks in the Panama Canal are very narrow — and OCNF’s six carriers allow them to be the dominant dry bulk shipper in a market segment that’s restrictive to other major dry bulk shippers.

OCNF also owns one Capesize ship, which is too large to traverse either the Suez or Panama Canal, so they’ll use this vessel to transport coal, ore, and other raw materials.

Here’s the upside trigger: Up until now, OceanFreight has been working on getting their ship deal off the ground. But as you read this, the deal has been finalized, which means that OCNF is now ready to begin chartering their vessels to five different suppliers operating in the dry bulk carrier sector. That’s the trigger that’ll gain the attention of Wall Street. In fact, take one look at their recent developments, and you’ll see just how quickly things are moving for this company:

Tuesday June 26^th OceanFreight announced they’ve entered into an agreement to acquire an eighth Panamax dry bulk vessel for $47 million that will immediately begin a two year charter. At a net rate of $28,000 per day for two years, OceanFreight’s Chairman and CEO Bob Cowen said, “This acquisition demonstrates OceanFreight’s commitment and capability to grow our fleet and enhance shareholder value in today’s highly competitive market environment. This acquisition will put the remaining cash raised in our IPO to work immediately, creating additional cash flow to support our dividend.”

Thursday, August 2^nd: OceanFreight announced that they have completed delivery of their initial seven-vessel fleet with the delivery of the two Panamax vessels (Helena and Topeka) ahead of the schedule. This is important because this delivery completion will add valuable revenue-generating days to OCNF’s third quarter — giving them predictable cash flows in the upcoming quarters. For example:

• Helena has a carrying capacity of 73,744 dry weight tons and will be employed on a one-year time charter at the net rate of $28,125 per day.
• Topeka has a carrying capacity of 74,710 dry weight tons and will be employed on a three-year time charter at the net rate of $21,656 per day.

OCNF’s initial fleet is listed in the table below:

If you once again refer to OCNF’s stock chart above, you’ll see that the stock has been setting a series of new highs on July 23^rd, July 24^th, and July 25^th. And now that their fleet has been completed in August, I feel that the gains are just beginning.

Not only that, but the recent market weakness has pulled the stock back down, moving it very close to their IPO price. This offers you a great opportunity to pick up shares right as the company begins their initial shipping operations.

With a market cap of only $576.20 million and total cash per share of $2.61, OCNF is about to begin generating cash immediately — something that Wall Street loves to see. With the stock bouncing strongly off their first-ever test at the 50-day moving average, I think we’re getting a great entry opportunity right now. Let’s be sure not to miss it!

PLAY: Buy shares of Oceanfreight (OCNF – NASDAQ) at or under $22.00 good for the week.

Sincerely,

P.S. SPECIAL OFFER REMINDER! On Wednesday, August 15^th, the opportunity to add Bottarelli Research Options to your investment arsenal for our discounted pricing will officially expire. That means you have only three trading days left to lock in this special rate, so be sure to lock in your space now! This will be the last reminder e-mail you receive, so click below for the compete details:

http://www.bottarelliresearch.com/promo/?2A0Y40U3BM

Sincerely,