KNOT Offshore

It’s cheap on earnings with a remarkably stable business and an excellent management team. Despite its stability, there’s confusion around the business (energy-related) and structure (LP, but not) which has offered up some buying opportunities over the years. Perhaps arbitrary but management has drawn a line in the sand with $20/share being the point they’d consider issuing equity to grow the business. At a recent $13/share, it was a sufficient discount to that bogey. Though it’s a good business, it’s better suited as a General. The drop-down structure and leverage make it vulnerable in a sell-off and tied to equity capital markets for growth (no/little retained earnings). The dividend at $2.08/share pays out close to 16%… if a year goes buy and shares tread water, I’ll likely take the dividend return and bolt.