AM - Antero Midstream: Significant Alpha On Offer But With One Big Caveat

• The high dividend yield of near 9% from Antero Midstream appears to offer investors significant alpha, although it comes with one big caveat.
• Based upon their financial performance and 2021-2025 guidance, they should have no issues sustaining their dividends, but there is limited scope for any growth in the foreseeable future.
• If this proves to be the case, their intrinsic value still appears to be over 30%+ higher than their current share price even if their dividends never see any growth.
• The potential problem, and thus big caveat, comes from the managerial risk they face as a subsidiary of Antero Resources, who already forced a 27% dividend reduction upon them earlier in 2021.
• Whether this ever happens again remains impossible to know, but sadly, it weighs down the appeal of their shares, and thus, I still believe that only a neutral rating is appropriate.

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