Decision Time for Global Partners

As with any security purchase the selling decision is always more difficult than the buying decision.

The new Global Partners (NYSE:GLP) 9.75% fixed-to-floating rate units is the one we are dealing with now.  The issue began trading on the Big Board today after trading for a week or so on the OTC Grey market.

At this moment the shares (GLP-A) are trading around $25.42 and have been as high as $25.50.  We had bought a small position of 300 shares on the OTC market when they 1st traded and we paid $24.82.  This means we have a profit of around 60 cents a share now which is a reasonable profit for a hold of 7 business days.

Originally it was our intention to hold the shares as Global Partners has recently released solid quarterly results and we think that the 9.75% coupon is as good as it gets from a solid issuer, but we are so tempted to exit in the $25.50 area.  If we had originally planned to ‘flip’ we would have probably bought more than 300 shares.

All things considered I am going to put in a good-til-cancelled order to sell in the $25.75 area.  It may or may not hit that area in the next week or 10 days, but if it did we would be happy to sell and if it levels out in the $25.50 we are happy to hold for the juicy distribution.


13 thoughts on “Decision Time for Global Partners”

  1. I foresaw this quandary and bought twice as much as I wanted to hold. Now I can sell half with a clear conscience. It helps too that I used the proceeds from my SPKEP sale for the transaction so that made me feel better. It’s probably a step up in safety so all-in-all I got to poach a little, sleep a little better at night, and still keep a large coupon.

  2. The gain you have is one quarter worth of dividends. If you were to sell this, what could you replace this investment with? Can you get another 9.8% yielding preferred that you are comfortable with?

    1. xwords59–no–there is no other issue with this coupon I could buy that I could sleep well at night with–for sure.

  3. Been there Tim as I’m sure this isn’t your first and won’t be your last time you’re in this situation. The profit is tempting and it never hurts to lock in a profit (as the saying goes). However, good earnings released, your initial intent is to hold for the juicy yield. Tuff decision. If your $25.75 hits I think you would not regret it.. You may even get a chance to buy again but me think nowhere near $24.82. Today I bought USBLL 300 @ $25.06 OTC thinking it will rise decently when it moves over. BUT, in my mind, I’m already thinking 1) I’ve transitioned to a more conservative investing strategy since leaving the workforce, 2) Investment Grade, 3) Qualified Distribution.. Heck if it drops below par I will double down and hold for the income.

    I’m sorry I’m no help which is evidence of you indicating “selling decision is always more difficult than the buying decision.”.. Good Luck

    1. Agree Blue Claw. There is no wrong answer here on the GLP.

      I have been looking at the USBLL–the quality bank preferred issues have performed extremely well and may jump in tomorrow.

      1. Tim, USBLL doesn’t seem like the kind of issue you’d purchase. Non-cumulative perpetual and with a 5.5% coupon. Am I missing something ?

        1. Hi Retired–so true–it would probably be a flip–for 40-50 cents. Since I have a little more time right now I would like to do a few more flips each month.

  4. Tim, I feel surprisingly at ease holding a modest outsized position with GLP-A. There just isnt many high yield issues I am comfortable owning so I may own mine longer term. I wouldnt be stunned if this crawls toward $26 when its first exD approaches outside of any great changes in economic outlook.

    1. Grid and Tim, this is an easy decision with my 700 shares. Just compare GLP.A and their underlying LP/Company/Corporation with the other preferreds that yield north of 9.5% and you will find that Global Partners LP is superior and has a longer real track record to the other underlying LP/Company/Corporations. Can anyone suggest a 9.5+% Preferred that is “safer” or more stable? Wishing you profitable investing, Nomad

      1. Nomad–yes — you are using common sense for sure–I will leave my GTC in place and see how it does–maybe am better to simply hold.

      2. Nomad, if you dont quit sing GLP’s praises, I may wind up holding until redemption! 🙂

        1. GLP’s preferred yield certainly doesn’t fit my risk adverse portfolio and profile, but unless I’m missing something, I may be in love ? I will continue to monitor their quarterly reports and any relevant news, but am convinced that GLP is currently on my “safe” and “secure” checklist!

    2. Grid–I agree. I put in a GTC order at 25.75 but it may get cancelled. I don’t know what we are missing on this one–the coupon at 9.75 seems like a gift of sorts.

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