Teekay Offshore: Abandoned Public Stub of Mission-Critical Marine Infrastructure Business

Jeremy Deal and Seth Lowry of JDP Capital Management presented their in-depth investment thesis on Teekay Offshore LP (NYSE: TOO) at Best Ideas 2018.

Teekay Offshore is an abandoned public stub of a mission-critical marine infrastructure business, re-capitalized by Brookfield Business Partners, trading at a ~25% cash flow yield. TOO is the largest independent owner/operator of mission-critical offshore pipeline infrastructure assets used by the largest E&Ps in deepwater drilling. The company is misunderstood to be dependent on rising oil prices, but instead operates in a niche duopoly insulated by long-term contracts with large oil companies. The recent enterprise value of $5 billion makes TOO a high-capacity idea to invest alongside one of the most successful real asset managers globally, at roughly the same valuation. Assuming mean reversion to historical multiples implies ~300% upside from the recent market quotation of $2.50 per share.

About the instructor:

Jeremy Deal is the Founder and Managing Partner of JDP Capital Management LLC, a San Diego-based hedge fund manager launched in 2011. The firm’s research process and culture utilizes a private equity-like approach to public company investing focused on deep value, distressed, and special situations within North American mid cap and micro cap equities. Prior to launching JDP Capital, Jeremy was a fundless private equity sponsor and co-founder of Secure Wireless Inc., a designer and manufacturer of intrusion security electronics sold to Nortek (NASDAQ: NTK) in 2006. Jeremy graduated from U.S. International University with a B.S. in Business and a minor in International Relations.

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