OSGIQ: Shipping Gone Wild

Overseas Shipholding Group Inc. (OSGIQ), traded surprisingly well today, finishing up 51.38% on the day. This impressive move was seemingly catalyzed by nothing more than sector hype and probably some short squeezing.

This is made interesting by the fact that the company has terrible financials. Unfortunately, quoting from them might not be very useful since their latest 8-K released just a few days ago states:

...the Audit Committee of the Board of Directors of OSG, on the recommendation of management, concluded that OSG's previously issued financial statements for at least the three years ended December 31, 2011 and associated interim periods, and for the fiscal quarters ended March 31 and June 30, 2012, should no longer be relied upon.

Regardless, it seems safe to say that the company's financials are weak. Maybe even abysmally so, at least according to two Infitialis reports released back in November.  That being said, the stock has tripled since the release of their report so clearly you shouldn't trust all of their predictions.

The best part though is that I think this stock has some more steam, at least in the short term. Originally, I actually tried shorting this midday, thinking it was pretty good risk/reward in the long run. Rather I found incredibly stubborn price action with massive hidden buyers at $3.10 for most of the afternoon. Even the break of the $3.10 level later in the afternoon didn't seem to invite any weakness and the stock even ramped up into the close along with industry leaders EXM (27.66%), DSX (5.38%), and GNK (+7.5%).

So despite poor fundamentals, I now find myself long OSGIQ overnight for several reasons. Perhaps the best reason is that it demonstrated solid price action all day with strong support to limit potential downside risk. The fun reason though is that combined with a strong close and surging sector, the stock has great potential for even more short squeezing. It's my hope that Friday will intensify this effect since shorts may feel even more apprehensive about holding over the weekend. If this surge in price allows the company to escape bankruptcy and releases any positive news, it could really fly. That of course is ENTIRELY speculative and unlikely to occur. Luckily I think today's price action was enough to justify a speculative buy and I eagerly anticipate tomorrows open to see how things play out.