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Global Partners: Don't Get Blinded By Their 10% Yield, Very Limited Potential Upside

Dec. 01, 2021 10:20 AM ETGlobal Partners LP (GLP)GLP.PR.A, GLP.PR.B32 Comments
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DT Analysis


  • Global Partners managed to push their distributions back to new heights quickly after reducing them following the onset of the Covid-19 pandemic.
  • Whilst this sounds desirable, they do not sport the desirable attributes of a solid income investment.
  • Not only is their cash flow performance very volatile, but their financial position also carries very high leverage and thus makes a distribution reduction quite likely.
  • Even if their distributions were sustained perpetually into the future in a bullish scenario, there is very limited potential upside remaining.
  • This increases the risks of overpaying for their units, and thus, I believe that maintaining my bearish rating is appropriate.

Balance with risk and benefit concept, 3d render illustration

AlessandroPhoto/iStock via Getty Images


After initially reducing their distributions following the onset of the Covid-19 pandemic, Global Partners (NYSE:GLP) quickly grew them back to new heights with their yield currently sitting at a very high 10.11%. Whilst their

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I am no longer active, as I am taking a hiatus from finance to pursue business ventures in other sectors.  I hope that my analysis was helpful to investors across the years, thank you.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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Comments (32)

starcorral profile picture
It's a decent distribution, but I was not counting on a 40% jump in less than a year. I am amazingly simple minded: Where are they? What do they do? Will demand decrease? How well does management read the market and manage the operation? Seriously - I have confidence that the segment will remain strong, but GLP has got many things going well for its business and shareholders.
Jcb331 profile picture
@starcorral its up 13% today. highest price since june 2015
I better make sure not to get blinded by the $1.50/share jump today either.
DividendInvestorLA profile picture
@pyrotechnic67 The problem with Daniel is that he's not wrong 100% of the time, because he is so often wrong, he'd be the greatest guru on SA!
@DividendInvestorLA thats pretty funny. But looks like this time, my man was 100% wrong.
DividendInvestorLA profile picture
@AWhiteRussian Daniel is the Nouriel Roubini of SA. Always saying his stocks are headed down. No accountability when he's wrong, just like Nouriel who is still looked at as competent or even a guru by the media and even some shrewd observers when he's wrong 95% of the time...
Jcb331 profile picture
new 52 week high.$27.94
kinda missed the call on this one...
good thing i backed up the truck when this was 20-22 to pick up that very secure & insider owned dividend
". . .Very Limited Potential Upside." Up 22% since that was written. LOLOL.
Jcb331 profile picture
Div increase to $0.585. 9.25% yield.
Rysum profile picture
I get nervous with anyone who uses the word 'whilst'
@Rysum Usually means a Limey wrote it. LOL.
The author is wrong again. Now a month later and the stock is up 13%. He is so bad one could make significant $ just by buying his sell ratings
DividendInvestorLA profile picture
@gebarnhart It is indeed tempting, but there's always the possibility of an accidental good call... ;) My main problem with him is he does not understand the companies he is "analyzing", especially how their financials have to be looked at.
CincinnatiRick profile picture
@DividendInvestorLA I see it a bit differently. It seems like the focus is entirely on the numbers and dividend and very little on the underlying business. But yes, it's always thin.
DividendInvestorLA profile picture
@CincinnatiRick Good to hear from you Rick. :) You are correct. Most of his "analysis" is basic "stock analysis 101". The reason I think he doesn't understand the companies is that he applies that almost systematically to companies where those tools don't work.I do love the way he keeps at it, however. He understands that you can be wrong 100 times and right once and you'll be hailed as a guru! ;)
Skip Town profile picture
I think gas stations/convenience stores are here for a long time. And they have 24 Bulk terminals. Their only sin is they are "energy." Great investment. (Did I mention heating oil? Still in use-- and they are shutting down natgas pipelines as we speak.)
DividendInvestorLA profile picture
The same usual nonsense from Daniel.Who, in their right mind, is expecting high growth from a 10% yielder? Makes no sense... at all.
Ive bought and sold glp a number of times in the last ten years.

But as i approach retirement im beginning to think i should hold glp. 2/3 preferred and continue to buy another 1/3 on the big dips and sell at the recovery w a total port invest of 1.5% maybe a litte more.

The barriers to entry in the gas-C Store biz in the Northeast is incredibly difficult...same w distribution.
Just like most of his other reports he is negative at the wrong time.you would be better off to ignore him.
DividendInvestorLA profile picture
@dennis rfm The problem with Daniel isn't the number of his misses (I have quite a few myself), but the fact that he opined on companies he doesn't understand based on assumptions about investing in them which are just bizarre.
@DividendInvestorLA he just writes this stuff to get paid. Just ignore him or you will lose if you buy his stuff.
kwayne01 profile picture
I have owned GLP since September 2008 and I really like it. Maybe a better article would have been “GLP buy on any price dip”.
On another note, your articles are much appreciated, HOWEVER you follow up engagement with your readers seems nonexisistent . To bad
DividendInvestorLA profile picture
@MDN1 Indeed. On USAC he got great feedback from people who really know the stock and how it must be approached to analyze it and refused to engage or learn.
As usual for this author, he pays no attention or does any research in the underlying markets of his reviewed companies and so he is often wrong. Here is a company that is customer facing and was hammered by COVID and yet no mention of this by the author? I think he is a pure numbers junkie hooked on his Monte Carlo simulations without understanding a companies market I don’t think he reads transcripts of earning calls or else he would see that GP is acquiring new outlets, over 30 in last year with more additions coming which add to income.
So he posits a bearish article in Aug and then GP beats big in Nov, as COVID impacts decline, and would have been even higher except for onetime retirement payout. There are always risks, but with GP it is more about compressing margins and higher labor costs, not over excess leverage.
@gebarnhart Totally agree! I'm up 35% in a year. GP's investments in renewable energy and adding charging stations at existing locations all bodes well for the future. Limited real-estate in the NE to add charging stations gives them a competitive advantage.
DividendInvestorLA profile picture
@gebarnhart Pretty much, he insists on using Fin Analysis 101 tools indiscriminately on high-yield companies without any understanding on how the distributions work...Just annoying to see him featured again and again like he was some sort of great resource.
Daniel, thanks for the coverage on GLP. Do you have any conviction on their Pref A & B shares? Thanks
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