CASE STUDY UPDATE: Global Ship Lease (GSL)

July 30, 2023

Our investment in Global Ship Lease (GSL) has been one of our best ideas thus far.

Shipping is a terrible business.  It is asset-intensive, with low returns on capital.  There are short-lived booms and sustained busts.  Also, the booms are impossible to predict with any precision.

However, if you can buy shipping stocks when they are significantly undervalued, you have good odds of earning high returns.

I first wrote up the idea of GSL in June 2020 here:

At the time, the stock at $4.62 a share was extremely cheap based on our five measures of cheapness:

    • EV/EBITDA = 5.28
    • P/E = 1.93
    • P/NAV = 0.20
    • P/CF = 0.81
    • P/S = 0.29

These figures made Global Ship Lease one of the top ten cheapest companies out of over two thousand that we ranked.

We bought GSL stock in June 2020 at $4.57.  Today the stock is at $21.58.  The position is up over 370% so far, which makes it our best-performing idea.

But there still appears to be substantial upside for GSL.


70% of global containerized trade volume is in non-mainline routes—and these routes are growing faster than mainline routes.  These routes are served by mid-sized and smaller containerships.  This is where GSL focuses.


The supply of mid-sized and smaller container ships is constrained.  The orderbook-to-fleet ratio for these ships is at 14.5%.  It takes two to three years for shipyards to make a new ship.  If all 25+ year-old ships were scrapped, then the annual growth rate for mid-sized and smaller ships would be about 1.1%.

GSL today

As of the end of Q1 2023, the total charter backlog is $2.1 billion, which is 2.5 years of contract coverage.  GSL’s revenues, cash flows, and earnings are already set at high levels for the next 2.5 years.

Here are the current multiples for GSL:

    • EV/EBITDA = 3.23
    • P/E = 2.64
    • P/NAV = 0.35
    • P/CF = 1.88
    • P/S = 1.21

George Youroukos, Executive Chairman of the Board, recently acquired approximately $10 million of GSL’s stock.  Youroukos clearly believes GSL’s stock is cheap.   This brings Youroukos’ total position to 6.4% of GSL’s outstanding shares, worth over $50 million.

The Piotroski F_Score is 7, which is decent.

Cash is $162.2 million, while debt is $882.8 million.  The company continues to pay down its debt and expects to have $757 million in debt by the end of 2023 and $588 million in debt by the end of 2024.  Moreover, GSL has reduced its cost of debt from 7.56% in Q4 2018 to 4.53% in Q1 2023.

TL/TA (total liabilities/total assets) is 51.8%, which is pretty good.

ROE is 33.0%.  The high ROE is due in large part to leverage.  ROA is 13.7%, which is still decent.

The current dividend yield is 7.0%.  Also, the company has bought back $33.8 million shares and has $6.2 million left to spend on buybacks.  Because the stock is quite undervalued, the buybacks are very accretive for shareholders.

Here is GSL’s Q1 2023 earnings presentation:

Intrinsic value scenarios:

    • Low case: If there is a bear market or recession, GSL could fall 50%, from today’s $21.58 to $10.79.  This would be a major buying opportunity.
    • Mid case: Global Ship Lease has a P/E of 2.64, but should have a P/E of at least 6.  That means the stock is worth approximately $49.05, which is about 127% higher than today’s $21.58.
    • High case: GSL should have a P/E of 8.  That means the stock is worth about $65.40, which is over 200% higher than today’s $21.58.

Bottom Line

GSL is one of our best-performing stocks, up over 370% since we bought it in June of 2020.  The Boole Microcap Fund continues to hold much of the position because GSL is still undervalued.   If GSL hits $49.05, it will be up over 970% since we bought it.  If GSL hits $65.40, it will be 1,330% since we bought it.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.




Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.