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Global Ship Lease's 9.5% Yield + Its Preferred's 8.7% Yield = The Ultimate Upside/Income Combo

Sep. 26, 2022 12:00 PM ETGlobal Ship Lease, Inc. (GSL), GSL.PR.BDAC, ZIM38 Comments


  • Global Ship Lease's fleet employment provides exceptional cash flow visibility. The recent charter extensions were the icing on the case.
  • Capital returns should only accelerate from here, while the stock's massive undervaluation to NAV provides a substantial margin of safety.
  • By combining GSL's common and preferred shares, one can build the ultimate high-income setup, with dividends covered multiple times over.
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Montmartre lingpowered ultra large and modern containership

David Taljat

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This article was written by

Nikolaos Sismanis profile picture

Hi there!

I hold a BSc in Banking and Finance. Here, on Seeking Alpha, I cover a variety of growth stocks and income stocks, including identifying those with the highest expected return potential, and a solid margin of safety.

Currently contributing as Promoting Author to the "Wheel of Fortune" marketplace.

Feel free to contact me at any time, and follow me here on S.A. for regular content and updates!

Happy investing!


Analyst’s Disclosure: I/we have a beneficial long position in the shares of GSL, DAC, ZIM, TRTN either through stock ownership, options, or other derivatives. 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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Comments (38)

22 April 2023: Next Call Date on GSL.PB. Any hints out there on what GSL is going to do with them?
Econ Wanderer profile picture
Ended up being great buys. Great call. Hoping my 20-22.5 call spreads bought at $17 end up returning maximum over the next 2 weeks.
Capital shipping conference link from Sept 21, 2022. sound quality not great but lots of good color.

Andrew Corporate profile picture
Bad thing to gsls name is that they have 900mn in long term debt. But this should be reduced a lot once they generate free cash flow, they are still on -5mn free cash flow trailling months due to investments. I hope and think we will see free cash flow going to the ballance sheet next quarters, as the income was generated for past year but no cash flow yet.
Andrew Corporate profile picture
@andrew1corporate1 im still long gsl, only shipping stock i own because of niko and mintzberg and 2 p/e till 2024 which is set in stone. Pog Gsl, MPCC has 2 p/e also have a one seventh my gsl stock mpcc as speculation. Also a 2/pe stock trailling and forward 2023 2024 yet they have no debt compared to Gsl

Opinnions on Mpcc anyone?
Good day Nikos, thank you for another interesting article!

Since you are also long on GSL preferreds, I wanted to ask if you are aware of the Navios preferreds debacle (NM Series G & H) where basically they stopped paying dividends for years and launched a few tender offers for buying them back at well below par prices ?
I am myself invested in GSL prefereds and not trying to draw any parallels but being a novice investor and not knowing that this was actually legal (!) has shaken my conviction of investing in shipping COs preferreds.
Nikolaos Sismanis profile picture
@Don.Hall Hi, and thank you for your kind words! I am aware of the situation but have not followed Navios. I have also not checked the documents linked to their preferred. But from what I know, yes, they can make any offer, but this doesn't mean investors have to sell at that price. If they want to redeem the preferreds, they will have to pay the par value of $25.00 + all the accrued dividends. Their offer is kinda sketchy indeed.

For GSL, I don't think you should be worried. They are comfortable paying the common dividend, let alone the preferred one. If anything, they could be issuing some preferred stock from time to time as a financing tool. Nothing is guaranteed, of course, but again, I don't see any reason to be afraid of GSL's prefs.
Hello Mr. Sismanis - what might be your thoughts be on the preferred shares TGH-A with the reset provision at call in 6/26? Or have you covered this before? If yes, would you please share a link. Thanks in advance.
Nikolaos Sismanis profile picture
@16218032 I haven't really looked into THG's preferreds, so I am not familiar with their unique characteristics. Maybe at some point soon ;)
@Nikolaos Sismanis Thanks. Would be very interested in your examination and opinion. Competitor to Triton
Thanks for the GSL.PB ideal, was looking at the price chart and you could of brought this in the March 2020 sell off for about $14.50(I like to torment myself). Already long GSL with a 3.5% position and to long in shipping but this is going on the watch list, if it implodes I'm all in.
Nikolaos Sismanis profile picture
@amwohlman Buying preferreds of solid shipping companies during market panics can be incredibly sweet.
thebellsareringing profile picture
Great article! I own the common and tomorrow I will purchase GSL-B.
i want the spread to be wider between it and treasury rate before stepping in. Don't chase yield when treasury ST is yielding 4%.
What is the lease contracts get renegotiated or the leasors go bankrupt. Are the counterparties in good financial standing especially the ones with the most contracts
Nikolaos Sismanis profile picture
@vavemula Yes, counterparties are super rich in cash rn.
GSL down 36% ytd?
Nikolaos Sismanis profile picture
@kmoist Sadly (or not so much for current buyers)
ceo_of_the_whole_sht profile picture
Whoaaa! Mr.Sismanis does it again!!
What an amazing piece of work this article is (just like all other Mr.Nikolaos has published)!!

For anyone reading this comment & wanting to be rich; Keep buying more and more $DAC, $GSL & $ESEA as their price tag goes lower — It’s a generational opportunity and you’ll definitely won’t regret it in the next couple of years!

Stay & invest safe folks!!
Nikolaos Sismanis profile picture
@ceo_of_the_whole_sht Uhhhm ok, haha, thanks for reading it, man.
Why not buy ZIM instead?
Nikolaos Sismanis profile picture
@CyberSpyder ZIM is a liner. If containership rates plummet further they may have a hard time. GSL, on the other hand, has secured revenues for multiple quarters ahead. A much better risk/reward case imo.
@Nikolaos Sismanis


Sure there is risk, but rates have already plummeted. There will always be a need for container ships so the rates have to find a bottom somewhere. The real question is how close to the bottom are the rates now.

You are drooling over 8.7% and 9.5% yields on GSL…

…last I checked, the yield on ZIM was over 117%

But perhaps more importantly…

Price/Sales (ttm) 0.20
Price/Book (mrq) 0.53
Enterprise Value/Revenue 0.29
Enterprise Value/EBITDA 0.44

…Seems pretty cheap, no?
@CyberSpyder, "pretty cheap"
Sort of, but it can get much cheaper.
Container rates were in a bubble, have yet to bottom and more supply is coming onstream in 2023, just in time for the recession. I don't like those odds. I was fortunate to make a good profit on ZIM and have redeployed the funds elsewhere. ZIM will likely soon experience a rally / dead cat bounce, but so will a lot of other stocks.

Much better risk/reward candidates in the marketplace (e.g. other shipping sectors such as lessors and bulkers, energy stocks - producers and pipelines)
Andrew Corporate profile picture
@Nikolaos Sismanis what are the forward p/e of trtn.pc cmre.pb top of your head?

Forward p/e for 2023 2024
Bad thing to gsls name is that they have 900mn in long term debt. But this should be reduced a lot once they generate free cash flow, they are still on -5mn free cash flow trailling months due to investments. I hope and think we will see free cash flow going to the ballance sheet next quarters, as the income was generated for past year but no cash flow yet.

But agn trtn and cmre
Nikolaos Sismanis profile picture
@andrew1corporate1 You can't really use P/Es in prefs.
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