Terence Channon
Special situations, contrarian, hedge fund manager

Natural Resource Partners, L.P.: A Match For Contrarians; A Trap For Income-Oriented Investors

Natural Resource Partners, L.P. (NYSE:NRP) owns, manages and leases mineral producing properties throughout the United States. NRP has no direct mining operations. They own the rights to properties that produce things like coal, oil, natural gas and soda ash and subsequently allow operators to extract the stuff out of the ground in exchange for lease and royalty payments.

Since NRP is structured as a MLP or Master Limited Partnership, it seeks to distribute as much of its incoming cash flow as possible to unit holders. NRP's biggest cash obligations are some basic administrative expenses and interest expense on debt used to acquire additional resource-producing assets and properties. Hence, the price of the units is driven by the partnership's...

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