Legacy Ridge Capital Management, an investment management company, released its Q4 2025 investor letter. A copy of the letter can be downloaded here. The Partnership returned 7% net of a 1% performance fee in 2025. Market volatility led to the Partnership’s weaker-than-expected performance last year. The year started strongly but faced challenges after Liberation Day, despite wisely investing during the market’s lows. The Partnership showed progress from November to mid-December. The letter also noted that a shift in the calendar end date would have improved returns by over 4%, highlighting the unpredictable nature of concentrated value investing. The portfolio is concentrated in 10 names, and the dividend yield is approximately 6%. Please review the Partnership’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Legacy Ridge Capital Management highlighted stocks like Kimbell Royalty Partners, LP (NYSE:KRP). Kimbell Royalty Partners, LP (NYSE:KRP) is a US-based company that owns and acquires mineral and royalty interests in oil and natural gas properties. On February 3, 2026, Kimbell Royalty Partners, LP (NYSE:KRP) stock closed at $13.53 per share. One-month return of Kimbell Royalty Partners, LP (NYSE:KRP) delivered a 17.65% return in the past month, and its shares are down 12.48% over the past twelve months. Kimbell Royalty Partners, LP (NYSE:KRP) has a market capitalization of $1.46 billion.
Legacy Ridge Capital Management stated the following regarding Kimbell Royalty Partners, LP (NYSE:KRP) in its fourth quarter 2025 investor letter:
“Rather than a full company description of Kimbell Royalty Partners (KRP) and Mach Natural Resources (MNR), we’ll focus on the differences and then the similarities. Kimbell owns mineral rights. That means they don’t own land, they don’t have an obligation to drill, they don’t even have to put up capital to benefit from the assets they own. Put simply, they possess the rights to a commodity that another party wants to extract and that party will pay a percentage of revenue to extract the commodity. KRP owns approximately 158K net royalty acres, an interest in over 131,000 wells, 68 million barrels of oil equivalent (BOE) of reserves, and produces 25,530 BOE per day. KRP has more than 14 years of drilling inventory, and a production decline rate of ~14%. Lastly, next year’s dividend is expected to be $1.43/share, or a 10.8% yield
Mach is different from KRP in the sense that MNR is a non-traditional exploration and production (E&P) company. The company buys or leases producing acreage and then drills additional wells when and where they think they have a knowledge or operational advantage. Before tackling the MNR business model, it’s important to distinguish between land leases and mineral ownership. Owning minerals means just that! KRP can sit on the minerals it owns until judgement day. There is no obligation to drill, just the promise (or expectation, assuming the purchase was strategic) that an oil and gas company shows up and requests to drill a well. Leasing a parcel of land conveys the right, but typically not the obligation to drill a well. If the E&P does find oil and gas, they must pay the royalty owner a fee (to KRP, for example). The terms of the lease contain stipulations. The most important stipulation is how long the lessee can sit on the minerals before attempting extraction. However, if and once the minerals are flowing, that acre is contractually viewed as to be held by production (HBP). As long as HBP is in effect, the acreage remains with the lessee. It’s worth noting here that 99% of MNR’s 2.8M acres are held by production.4 Additionally, MNR has an interest in 12,600 operating wells, 653 million BOE of reserves, and produces 151,000 BOE/d. And finally, consensus estimates for next year’s dividend are $2.20/share, or a 19.3% yield…” (Click here to read the full text)
Kimbell Royalty Partners, LP (NYSE:KRP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 14 hedge fund portfolios held Kimbell Royalty Partners, LP (NYSE:KRP) at the end of the third quarter, compared to 18 in the previous quarter. While we acknowledge the risk and potential of Kimbell Royalty Partners, LP (NYSE:KRP) 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 Kimbell Royalty Partners, LP (NYSE:KRP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q4 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.
