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 - Get Report). 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), whose stock remains one of the most-watched and manically traded of any company its size in any industry.
The Diana Armada
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.

"They call things by their names," says one prominent U.S.-based ship broker, who does business with just about every large dry bulker out there. "They're honest and straight. If you see their business practices, you can't say they're double dealing."

The broker was implicitly referring to the firms, often wholly owned by the magnate CEOs of publicly traded bulk carriers, that charge those carriers a yearly fee to manage their fleets. Under such arrangements -- very similar to the REIT structures of yore -- millions of dollars a year go directly into the bank accounts of the magnates. (A little more than half of the publicly traded dry bulkers employ this set-up, the most famous being Cardiff Marine, majority owned by DryShips chief George Economou.)

The counterargument is that, by using an outside manager, a public company merely replaces the need for a multimillion-dollar executive payroll. But the conflict potential is obvious.

For example, sometimes a magnate also owns a private fleet of carriers, and will on occasion buy or sell a ship from or to the publicly traded company, booking a brokerage fee for the magnate's privately held management firm in the process. If this seems shady, it's not illegal. The company need only disclose the deals in its SEC filings.

But the practice does have ramifications. When Diana went public, its investment bankers urged it to keep its management in-house, lest it scare off institutional investors. (Nor does Palios, or any Diana executive, own a private fleet.)

And so, a year after its IPO, Diana "bought" CEO Palios's management firm, Diana Shipping Services, for $20 million. The company says that the firm first needed to shed assets irrelevant to the dry-bulk business -- a Greek real-estate development outfit, for example -- before bringing it under the corporate umbrella. Though this may seem a bit dubious, at least Diana's management is now indeed in-house. (As with many matters dry-bulk, the positives are sometimes relative positives.)

Part and parcel with its overall reputation, Diana is also known for being bearish. Since at least the end of the first quarter, the company has been raising its semaphores: the economy has not commenced a rebound. In fact, Diana executives have been saying, the dry-bulk shipping cycle has yet to reach its bottom. This contrasts with rivals, who have used a late-spring spike in shipping rates this year as evidence that conditions have begun to improve.

The distinctions were clear this past week in New York, at a shipping-industry conference that brought together company executives, investment bankers, commercial bankers, and investors for several days of commiseration, presentations, and appeals. Many companies were at the conference hunting for money from the banks in order to fund their new ship orders and planned acquisitions in preparation for a rebound.

Diana sent a senior manager to New York as well. Over coffee in the lobby restaurant at the St. Regis Hotel, in Midtown Manhattan, the company's president, Anastassis "Stacey" Margaronis, sat down with TheStreet.com and laid out once again the bearish Diana position.

COMING LATER TODAY: Diana Shipping's Margaronis Reveals the Truth Behind the Shipping Slowdown

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