Best in Class: Why Diana Shipping Stays Dry

Once you start looking into it, almost nothing about the dry-bulk shipping business is boring.

For sheer theater, the industry has it all: outrageous boom-bust cycles; a ruling class dominated by outsized personalities; traffic in sometimes unseemly-seeming business practices; wild share-price swings; heavy trading volumes; pirates.

But for sober investors in this vivid space, the best course of action may lie in seeking safe anchorage on the boringest boat in the harbor. (We beg your pardon, here at the outset, for the seafaring metaphors that seem habitually to pepper stories about the shipping business -- including, already, this one.)

A list of the dullest bulkers would begin (and possibly end) with Diana Shipping(DSX Quote). Like almost every one of its peers, Diana first sold equity to the public only four years ago, in 2005, following the lead of DryShips(DRYS Quote), whose stock remains one of the most-watched and manically traded of any company its size in any industry.

Also like most of its peers, Diana is based in Greece -- seat of the world's dry bulk trade -- and was founded by the kind of businessman who always seems to attract the term "magnate" as an appellation. Simeon Palios, Diana's chief executive, formed the Athens company in 1972. And, as with Greek shipping magnates in general, Palios comes from a long line of mariners stretching back, it sometimes appears, to Thermopylae.

But that's about where the similarities end between Diana and its rivals. Unlike many dry bulkers, which have in the past shown a taste for aggressive leverage and supercharged growth as much as any LBO shop or hedge fund during the boom years, Diana has a reputation for conservatism: for cautious strategy, measured growth, clean balance sheets, relative transparency, and candor.