Right Tail Capital, an investment management company, published its Q1 2026 investor letter. A copy of the letter can be downloaded here. The current market is volatile due to uncertainties from artificial intelligence implications across industries, geopolitical tensions, including the US-Iran conflict, and other macro developments. In this environment, the firm seeks businesses with resilient economics and strong management. The firm believes this period offers opportunities for patient investors to acquire robust companies at attractive prices, emphasizing that the market will ultimately reward the long-term cash-flow generating power of businesses. The firm continues to invest in companies with a long-term perspective to navigate these challenges. In addition, please check the Portfolio’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Right Tail Capital highlighted Natural Resource Partners L.P. (NYSE:NRP). Natural Resource Partners L.P. (NYSE:NRP) is predominantly a coal royalty company that owns, manages, and leases a portfolio of mineral properties in the United States. On April 8, 2026, Natural Resource Partners L.P. (NYSE:NRP) closed at $120.76 per share. One-month return of Natural Resource Partners L.P. (NYSE:NRP) was 1.13%, and its shares gained 34.19% over the past 52 weeks. Natural Resource Partners L.P. (NYSE:NRP) has a market capitalization of $1.6 billion.
Right Tail Capital stated the following regarding Natural Resource Partners L.P. (NYSE:NRP) in its Q1 2026 investor letter:
“Natural Resource Partners L.P. (NYSE:NRP) is predominantly a coal royalty company owning 13M acres of mineral interests. In any given year, free cash flow is typically 80%+ from mineral royalties and up to 20% from their JV in a soda ash mining company. Of the coal royalty revenue, 65-75% typically come from metallurgical coal royalties with the remainder from thermal coal royalties. I like that the business is primarily exposed to metallurgical coal, a key ingredient in making steel and one where limited new supply is being added.
Royalty companies earn revenue from any mining that is done on the land they own. They’ll work out a contract with the mining company as to what percentage of revenue needs to be paid as a royalty. These can be fantastic businesses as I learned during my time at T. Rowe as a small cap metals and mining analyst. I came to appreciate companies like Franco Nevada, a precious metals royalty company with an eye for the long term. With properly capitalized royalty companies, time is really your friend in a number of ways. Land ownership allows the royalty companies to ride out the more difficult times. Furthermore, royalty companies benefit from significant operating leverage when commodity volumes and prices increase as their minimal costs (operating margins are typically 70-75%) remain unchanged. With a producer, it’s not uncommon to see rising costs accompany rising prices. Based on my estimates, NRP has 25+ years of remaining reserves on its metallurgical coal royalties, and 70+ years of remaining reserves on its thermal coal royalties. That’s a lot of duration. And yet the business trades at a high single digit multiple of normalized earnings. The market is saying we can only capitalize 8-10 years of earnings, yet we have 25+ years of reserves….” (Click here to read the full text)
Natural Resource Partners L.P. (NYSE:NRP) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 9 hedge fund portfolios held Natural Resource Partners L.P. (NYSE:NRP) at the end of the fourth quarter, up from 6 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 the list of best coal mining stocks to buy. In addition, please check out our hedge fund investor letters Q1 2026 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.
