Greystone Capital Management, an investment management company, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the median account return for separate accounts managed by the firm was +14.8%, net of fees. The fund favorably compared to the S&P 500 and Russell 2000 returns of +10.9% and +8.5% during the quarter. The median account returned +6.3%, net of fees, year-to-date, exceeding the S&P 500 and Russell 2000 returns of +6.2% and -1.8% year-to-date. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.
In its second-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 5.30%, and its shares gained 15.10% of their value over the last 52 weeks. On August 1, 2025, Natural Resource Partners L.P. (NYSE:NRP) stock closed at $102.68 per share, with a market capitalization of $1.349 billion.
Greystone Capital Management stated the following regarding Natural Resource Partners L.P. (NYSE:NRP) in its second quarter 2025 investor letter:
“Natural Resource Partners L.P. (NYSE:NRP) is our coal royalty business that was first introduced in our Q4 letter. As a reminder, NRP has been consistently paying down debt since 2017 with the aim of holding a net cash balance sheet, which I estimate they will reach within 12-15 months. Despite the less-than-stellar near-term outlook for NRP, we are playing for long term upside, with a number of attractive elements to this investment that could drive strong returns over time.
As management has telegraphed, if met coal prices linger at current levels, due to lower royalties received, free cash flow generated from NRP’s mineral rights business in 2025 will be less than previous years. This is weighing on the stock so far this year. Keep in mind that NRPs business was stress-tested remarkably during the past decade and remained cash flow positive even in the worst coal price environments. During 2016, when met coal production declined to its lowest levels since 1978, and spot prices for met coal touched below $80/Mt ($177/Mt today), NRP still generated $76mm in free cash flow. That year, they also paid $90mm in interest expense (versus an estimated $10mm during 2025), meaning unlevered free cash flow would have been $166mm, in the worst environment for met coal in 30 years. That is quite attractive.
During 2025, I estimate NRP will generate $130-140mm in unlevered FCF, representing a 10% FCF yield on the current market cap, despite what I consider to be trough met coal prices and trough soda ash prices. These cash flows will be coming back to us in short order, with massive upside on any cyclical upswing in China’s economy, lower global stockpiles and increased pricing. There is also further optionality in soda ash price increases and further carbon capture initiatives on NRPs land. I’d estimate met coal prices to be significantly higher than today’s levels by the end of the decade, as the supply/demand imbalance remains severe. Importantly, 2025 is projected to be another record year for global coal consumption. My estimate of intrinsic value is greater than 100% of today’s price.”
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, 8 hedge fund portfolios held Natural Resource Partners L.P. (NYSE:NRP) at the end of the first quarter which was 7 in the previous quarter. While we acknowledge the risk and potential of Natural Resource Partners L.P. (NYSE:NRP) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Natural Resource Partners L.P. (NYSE:NRP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Natural Resource Partners L.P. (NYSE:NRP) and shared Greystone Capital Management’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
