Abdalla Al-ayrot
Long only, deep value, special situations

Asymmetric Risk/Reward In Global Ship Lease

Background and business overview

Global Ship Lease Inc. (NYSE:GSL) is an international owner of container ships, with a fleet consisting of 17 container ships with a total capacity of 66,349 TEU as of December 31, 2013. The company charters its fleet under long-term fixed time charters. Their customer only customer is CMG-CMRE, as GSL was spun out of CMG-CMRE back in 2008. This makes GSL's counterparty risk concentrated, as its ship manager is also a subsidiary of CMG-CMRE.

The Predominant Bear-Thesis

The stock sold of heavily starting in the second quarter of 2011 (see Exhibit 1), as its only customer CMG-CMRE got into financial distress as a result of the combination of a high-degree of financial...

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