• The Macro Show → Get 30 Days Free Access (No Strings Attached)

    Your portfolio deserves more. Turn off unaccountable CNBC pundits and turn on “The Macro Show.” Hosted each morning by Hedgeye CEO Keith McCullough, The Macro Show is the best investing analysis money can buy.

Genesis Energy Is A 'Slow Moving Train Wreck' - oil image11111

Genesis Energy (GEL) announced a 31% distribution cut yesterday, from an annualized rate of $2.89/unit to $2.00/unit. The stock fell as much as -4.6% on the news. Energy analyst Kevin Kaiser has long been a bear on the stock, issuing his original short call on October 12, 2015. Shares are down over approximately 40% since then.

This call is not over. Kaiser says Genesis Energy (GEL) still has 50% downside.

"In our view, the new distribution is still long-term unsustainable given GEL only generates earnings and free cash flow of ~$1.00/unit," Kaiser wrote yesterday. "Any way you slice it, GEL is massively levered, and $110MM of annual distribution savings only reduces the Company’s leverage metrics by ~0.2x p.a."

Kaiser's short thesis remains that Genesis' "high valuation, super-aggressive non-GAAP accounting, high leverage, and low quality asset base and management team" justified selling the shares.

"GEL is a slow-moving train wreck," he wrote in June.

Here are the key takeaways from Kaiser's call back in October 2015.

Genesis Energy Is A 'Slow Moving Train Wreck' - gel1

Genesis Energy Is A 'Slow Moving Train Wreck' - investing ideas