Genesis Energy, L.P. (GEL): A Bull Case Theory 

We came across a bullish thesis on Genesis Energy, L.P. on Latticework’s Substack by MOI Global Equity Research. In this article, we will summarize the bulls’ thesis on GEL. Genesis Energy, L.P.’s share was trading at $17.33 as of February 4th. GEL’s trailing P/E was 41.53 according to Yahoo Finance.

Genesis Energy is an MLP focused on offshore pipeline transportation in the Gulf of Mexico, marine transportation, and onshore services, and is undergoing a meaningful transformation following the divestiture of its volatile soda ash business in Q2 2025 and the completion of a heavy pipeline capex cycle.

These actions have simplified the business model, removed commodity-driven earnings noise, and revealed a more transparent balance sheet supported by stable, infrastructure-like free cash flow across its remaining segments. With capital intensity declining and earnings rising, the company is entering a “flywheel” phase where improving fundamentals directly translate into higher free cash generation.

The offshore pipeline business represents the core value driver, consisting of irreplaceable deepwater assets with high utilization, low lifting costs, and long-term take-or-pay contracts. As new pipelines such as CHOPS, Poseidon, and SYNC ramp volumes from developments including Shenandoah and Salamanca, free cash flow is expected to inflect meaningfully.

The marine transportation segment further strengthens the thesis, benefiting from the Jones Act’s regulatory moat and a favorable supply-demand backdrop that supports elevated day rates, while the onshore segment provides steady, fee-based logistics income that adds resilience to the overall cash flow profile.

Management’s capital allocation discipline is a key differentiator in this new phase. Rather than pursuing acquisitions, the focus has shifted to deleveraging and retiring expensive preferred equity carrying coupons above 12%, while gradually growing the distribution by 10–15%.

This approach is designed to reposition the capital structure and enable a higher long-term payout, targeting a 75% payout ratio by 2027. With largely contractual revenues and limited downside risk, Genesis appears undervalued at $16 per unit, trading at a steep discount to peers. As distributions rise toward a projected $2.00 per share, the stock is positioned for a meaningful re-rating, implying substantial upside.

Previously, we covered a bullish thesis on Genesis Energy, L.P. (GEL) by chewy in September 2024, which highlighted the company’s undervaluation driven by depressed distributions, offshore pipeline growth, soda ash upside, and an impending free cash flow inflection as capex declined. GEL’s stock price has appreciated by approximately 38% since our coverage. MOI Global Equity Research shares a similar view but emphasizes the post–soda ash divestiture shift to a pure-play infrastructure model and dividend growth.

Genesis Energy, L.P. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 5 hedge fund portfolios held GEL at the end of the third quarter which was 5 in the previous quarter. While we acknowledge the risk and potential of GEL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GEL and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.