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Earning 45% In A Low-Risk MLP

Aug. 05, 2018 2:39 AM ETGreen Plains Partners LP (GPP), GPREREX19 Comments
Viking Analytics profile picture
Viking Analytics


  • I reiterate a fundamental value thesis for Green Plains Partners.
  • I outline my trading plan that has helped to earn 45% in this name over the past year.
  • I discuss one key risk that could affect unitholder value.
  • Members of my private investing community, Commodity Conquest, receive real-time trade alerts on this idea and many more. Learn more today >>


A little over a year ago, I published an article entitled, “The Best Value in Biofuels.” In this article, I outlined why I believed that Green Plains Partners (NASDAQ:GPP) was the best risk-reward investment in an industry that I have worked in and researched for over a decade. Both then and now, GPP is a low-risk, high dividend yield opportunity.

Since that article, the buy-and-hold dividend-adjusted returns for Green Plains (shown in the chart below) has ranged from a high of 10% in late July 2017 to a 8% low in December 2017, to a 2.5% investment loss at the close on 8/3/18. This chart shows distribution-adjusted values FYI.

Over the same period that a buy-and hold investor would have lost 2.5%, I have earned 45% by buying the GPP dips and selling the rips.

I have had confidence to buy the washout dips because I still consider GPP to be a low-risk, high yield investment. I outlined the reasons in last year’s article, and my overall value thesis has not changed:

  1. GPP's revenues are guaranteed by its parent in a mandated market;
  2. GPP's cash distributions have increased every year since its IPO; and
  3. GPP has take-or-pay agreements for a large majority of its revenues.

GPP analysts who express concern about declining volumes for GPP may not fully understand the nature of GPP’s take-or-pay contracts with its parent Green Plains, Inc. (NASDAQ:GPRE).

As a quick aside, I do believe that REX American Resources (REX) is currently the best fundamental value in biofuels. I outlined my long thesis for REX in this article which is behind Seeking Alpha’s paywall.

Many investors recognize that the stock market doesn’t seem care much about fundamentals: silly things like earnings and cashflow. As a result, fundamental deep value plays like REX and GPP are best managed

Commodity Conquest

In my Commodity Conquest service, I publish a daily commodity report for gold, crude oil, natural gas, and agriculture. I also do in-depth coverage of eight energy firms.

My verifiable trading record from on all completed trades through July 18th includes a win rate of 88% on my stock coverage trades, with an average return of 9.2% on an average hold period of 33 days.

This article was written by

Viking Analytics profile picture
Systematic and quantitative analysis.Rob McBride has 15+ years of experience in the systematic investment space and is a former Managing Director at a $14 Billion hedge fund. Rob has deep experience with market data, software and model building in financial markets. Erik Lytikainen has 25+ years of experience as an entrepreneur, business developer and financial analyst. He founded Viking Analytics in 2015 after selling a commodity production & trading company he co-founded in 2006.

Analyst’s Disclosure: I am/we are long GPP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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