Here’s Why Bernzott Capital Believes that Viper Energy (VNOM) is Undervalued

Bernzott Capital Advisors, an investment management firm, published its “US Small Cap Value Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. The portfolio fell -4.6% (gross), modestly below the Russell 2000 Value’s decline of -2.4% and the Russell 2500 Value’s decline of -1.5% for the first quarter of 2022. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Bernzott Capital US Small Cap Value Fund mentioned Viper Energy Partners LP (NASDAQ:VNOM) and explained its insights for the company. Founded in 2013, Viper Energy Partners LP (NASDAQ:VNOM) is a Midland, Texas-based publicly traded Delaware limited partnership with a $5.3 billion market capitalization. Viper Energy Partners LP (NASDAQ:VNOM) delivered a 37.31% return since the beginning of the year, while its 12-month returns are up by 60.95. The stock closed at $27.93 per share on May 09, 2022.

Here is what Bernzott Capital US Small Cap Value Fund has to say about Viper Energy Partners LP (NASDAQ:VNOM) in its Q1 2022 investor letter:

“Viper Energy (NASDAQ:VNOM): This mineral rights company, possessing a premiere sponsorship with Diamondback Energy, was the top contributor. Buoyed by Diamondback’s advantaged assets in the Permian Basin coupled with elevated oil prices, Viper reported strong earnings that produced significant FCF generation resulting in a 23% increase in distributions on a sequential basis. We expect distributions to continue to rise as Diamondback remains focused on growing production on Viper’s acreage and continue to believe the stock remains undervalued relative to its FCF generation and distribution growth potential.”

Our calculations show that Viper Energy Partners LP (NASDAQ:VNOM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Viper Energy Partners LP (NASDAQ:VNOM) was in 10 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 8 funds in the previous quarter. Viper Energy Partners LP (NASDAQ:VNOM) delivered a 10.29% return in the past 3 months.

In November 2021, we also shared another hedge fund’s views on Viper Energy Partners LP (NASDAQ:VNOM) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.