Natural Resource Partners L.P. (NRP): A Bull Case Theory

We came across a bullish thesis on Natural Resource Partners L.P. on Waterboy Stocks’s Substack. In this article, we will summarize the bulls’ thesis on NRP. Natural Resource Partners L.P.'s share was trading at $114.97 as of January 29th. NRP’s trailing P/E was 10.47 according to Yahoo Finance.

Natural Resource Partners L.P., together with its subsidiaries, owns, manages, and leases a portfolio of mineral properties in the United States. NRP an overlooked $1.36 billion MLP, presents a compelling opportunity rooted in durable assets, consistent free cash flow generation, and the prospect of a transformed balance sheet. The company controls roughly 20,000 square miles of mineral rights across the U.S. and owns 49% of Sisecam Wyoming, a major trona ore and soda ash producer. Its primary earnings driver remains coal royalties, supported by vast reserves of 1.59 billion tons that provide multi-decade visibility.

In the most recent year, 15.5 million tons of metallurgical coal and 12.2 million tons of thermal coal were sold from NRP-owned properties, generating $268 million in revenue with virtually no capex, resulting in $248.5 million of free cash flow. Despite management’s acknowledgment that soda ash is in a “generational bear market” and coal prices are unlikely to rebound meaningfully in the near term, the business continues to throw off significant cash—$42 million in the latest quarter—while paying down $32 million of debt.

The company is steadily progressing toward its target of a “fortress” balance sheet, defined as $30 million of cash and zero permanent debt, a milestone expected within the next year. Once achieved, distributions are likely to rise meaningfully. NRP also holds 3.5 million acres of carbon sequestration pore space that remains unleased, functioning as a free out-of-the-money call option with long-term upside potential. With units yielding 12.4% on run-rate free cash flow of $168 million and insiders owning 28.9%, NRP does not require optimistic market conditions to perform well, and its strengthening financial position provides resilience against future shocks.

Previously we covered a bullish thesis on Natural Resource Partners L.P. (NRP) by InvestSpecial in April 2025, which highlighted the company’s deleveraging progress, resilient royalty cash flows, and upside from a potential dividend restart. The company's stock price has appreciated by about 14.95% since our coverage. This is because the thesis played out through ongoing balance sheet improvement. The thesis still stands as cash generation remains strong. Waterboy Stocks shares a similar view but emphasizes NRP’s fortress balance sheet and carbon sequestration optionality.

Natural Resource Partners L.P. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held NRP at the end of the second quarter which was 8 in the previous quarter. While we acknowledge the potential of NRP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.