Natural Resource Partners, L.P.: A Match For Contrarians; A Trap For Income-Oriented Investors
- NRP is going through a transformative stage that could represent a compelling expansion opportunity for contrarian investors.
- NRP historically trades like a metallurgical coal stock, but royalties from this specific asset represents less than 50% of NRP revenues and may suggest divergence from strictly coal pricing.
- Increased debt levels, interest expense and chances of more dilution put NRP distribution at risk and should concern income-driven investors.
- Contrarians with a long-term horizon could potentially endure additional dilution and distribution reductions but near-term income investors should shy away.