The Advantages of Buying Royalty Companies

I think the risk reward is probably skewed more in the favor of a royalty business than it is in a EP right now. EMP valuations have been very sticky, we've kind of stuck in that four to six times range with only really the best of the best moving to seven or eight times cash flow. But what we've seen is that the spread, the yield spread between royalty companies and whatever the risk free rate, it's very sensitive. So I think royalties participate in in the movement of the underlying. But you know, you also get to participate big time in the movement Of interest rates and in the bettering of the underlying business.

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