Opinions
Stephen Groff
Viper Energy Partners LP
VNOM-Q
PAST TOP PICK
Jul 12, 2018
$32.190
Stock price when the opinion was issued
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TOP PICK
A royalty company that operates in the Permian Basin. Where you make your money is primarily through yield. Pays a 7.5%-8% dividend. He likes how they think. They have the backing of a general partner that can accelerate drilling on their property and drop down assets into the royalty. They own the mineral interests and royalties in their land. They don’t actually own a single pump, but just sit and collect cheques on their land. The trick is to value what you think the cash flow stream will look like. He likes that they will only invest incremental shareholder capital and target 20% IRR, which is quite healthy. Dividend yield of 7.8%. (Analysts’ price target is $21.)
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(A Top Pick Sep 6/17, Up 96%) He continues to like it and thinks it is still at an attractive valuation given the business model. Since the acquisition they have continued to deliver the cash flow growth. They have a good growth trajectory still.