Billionaire Howard Marks’ Top 10 Stock Picks

4. Sitio Royalties Corp. (NYSE:STR)

Oaktree Capital Management’s Stake Value: $269.57 million

Number of Hedge Fund Holders: 17

Sitio Royalties Corp. (NYSE:STR) is an energy company that acquires, owns, and manages mineral and royalty interests across premium basins in the United States. The company’s portfolio comprises mineral and royalty interests in the Permian basin located in West Texas. Since 2016, it has completed over 200 acquisitions of cash flow-generating acreage.

Thanks to the massive acreage, Sitio generates a percentage of revenues from companies that carry out oil and gas sales from the properties. It is only liable for its fair share of production and taxes as a mineral and royalty owner and sometimes for the expenses of collecting, processing, and shipping oil and gas. The royalty business model allows Sitio Royalties Corp. (NYSE:STR) to enjoy high margins of up to 90% in EBITDA.

Likewise, the company is able to generate significant free cash flow to reward investors with a 5.11% dividend yield. With a goal of returning at least 65% of its discretionary cash flow to shareholders, Sitio Royalties Corp. (NYSE:STR) has underlined its dedication to continue acquiring premium assets and upholding a sound balance sheet. The business is hopeful about utilizing its competitive edge into 2025, despite worries about infrastructure and shifting gas prices in the Permian.