KNOP - Undervalued Dividend Monster

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About: KNOT Offshore Partners LP (KNOP)
by: Guy Ausmus
This article is exclusive for subscribers.
Guy Ausmus
Long/Short Equity, Growth At Reasonable Price, REITs, energy
Summary

Knight Offshore Partners (KNOP) is a limited partnership managed and operated by Knutsen NYK (KNOT).

KNOP competes in a niche industry (shuttle tanker transport) with very favorable competitive characteristics.

These characteristics, plus the firm’s strong balance sheet and counterparty credit ratings augur for a low risk dividend producer.

Valuation using an perpetuity pricing model indicates that KNOP is undervalued by the market.

KNOP must be viewed as a Return of Capital, and a Return of Capital (depreciation) when valuing the units and the dividend.

Shuttle Tanker Industry:

Recent articles on Seeking Alpha have described this company in detail:

10% Yield, 1.46X Coverage, No K-1, Robust Earnings, Selling At Book Value: KNOT Offshore Partners LP

KNOT Offshore Partners: A Conservative