We are adding SHORT BP Prudhoe Bay Royalty Trust (NYSE: BPT) to our Best Ideas list.
BPT is an extremely overpriced oil royalty trust - our Base Case NAV is $33/unit, implying ~58% downside from the current price of $77/unit. The undiscounted sum of the future distributions is only $46/unit. According to our estimates, BPT will pay its final distribution in 2024 and then terminate (with immaterial residual value).
SHORT BPT is a rare, asymmetric risk/reward opportunity. (And a short negative carry trade if the oil price risk is hedged.)
Click here for FULL REPORT: Hedgeye Short BPT 1-15-2014