Natural Resource Partners L.P. (NRP): Strong Cash Flow and Upside Potential Amidst Market Challenges
Greystone Capital Management, an investment management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the median account return for separate accounts managed by the firm was -7.9%, net of fees. The fund unfavorably and favorably compared to the S&P 500 and Russell 2000 returns of -4.2% and -9.5% during the quarter. Client portfolios are concentrated in small companies mostly outside major indices, leading to returns that typically differ from those indices. In addition, you can check the fund's top 5 holdings to find out its best picks for 2025.
In its first-quarter 2025 investor letter, Greystone Capital Management highlighted stocks such as Natural Resource Partners L.P. (NYSE:NRP). Natural Resource Partners L.P. (NYSE:NRP) owns, manages, and leases a portfolio of mineral properties. The one-month return of Natural Resource Partners L.P. (NYSE:NRP) was 1.55%, and its shares gained 8.97% of their value over the last 52 weeks. On May 6, 2025, Natural Resource Partners L.P. (NYSE:NRP) stock closed at $98.00 per share with a market capitalization of $1.288 billion.
Greystone Capital Management stated the following regarding Natural Resource Partners L.P. (NYSE:NRP) in its Q1 2025 investor letter:
"During FY24, Natural Resource Partners L.P. (NYSE:NRP) generated $250mm in free cash flow, despite met and thermal coal prices significantly lower than those of the past few years. This is the beauty of the royalty business model, with no ongoing capital requirements and minimal operating expenses. To be clear, free cash flow generated during 2025 will be lower than 2024, but within the next year or so, NRP will have the flexibility to both repurchase units and significantly increase their distributions to unitholders, amounting to a 15-20% yield on the current price. A shutdown of China as a coal export market for the US would not be good for either country, especially as the current administration aims to reinvigorate the coal industry. As a result, it's likely that cooler heads prevail. If not, NRP is nowhere near priced for perfection as intrinsic value lies between $200-250/share versus the current price of $100/share."
A coal miner at their place of work, with the coal reserves in the backdrop.
Natural Resource Partners L.P. (NYSE:NRP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held Natural Resource Partners L.P. (NYSE:NRP) at the end of the fourth quarter, compared to 5 in the third quarter. While we acknowledge the potential of Natural Resource Partners L.P. (NYSE:NRP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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