TPL

Texas Pacific Land ($TPL) Insiders Keep Buying: What Persistent Purchases Signal After 125% Surge Following S&P 500 Inclusion

03/31/2025 15:12

Texas Pacific Land Corp ($TPL), a major land owner in Texas, has seen its stock price demonstrate remarkable momentum, drawing investor attention to its insider trading patterns. Over the past 18 months, $TPL shares have surged more than 125%, climbing from approximately $580 to over $1,300, with a notable peak exceeding $1,700 in November 2024. $TPL owns approximately 880,000 acres of vast land in West Texas, generating revenue primarily through oil and gas royalties and water services. What makes this company particularly interesting is that its land is situated in the Permian Basin, one of America's most productive oil regions. The company derives roughly 70% of its revenue from oil and gas royalties and 30% from water services, with a business model characterized by low operating costs and high profitability. According to insider trading data, major shareholder Horizon Kinetics Asset Management LLC (HKAM) and Director Murray Stahl have consistently purchased shares over the past 18 months. Notably, they have maintained their buying pattern regardless of stock price fluctuations. HKAM has regularly purchased 1-3 shares at a time since June 2024, while Director Murray Stahl has bought primarily 10-12 shares almost daily since August 2024. Interestingly, footnotes in the insider trading filings reveal that Director Stahl has close ties to HKAM. According to SEC filings from February 2024, HKAM holds 1,271,975 shares of TPL, with Murray Stahl having a direct interest in 2,474 shares and an indirect interest in approximately 53,550 shares. It's also worth noting that many of his purchases were made pursuant to a Rule 10b5-1 plan, suggesting these were pre-planned transactions rather than ones based on inside information. In contrast, some senior executives have sold shares at price peaks. In November 2024, CAO Stephanie Buffington sold 210 shares for approximately $290,000, and CFO Chris Steddum sold 350 shares for about $470,000. Additionally, in March 2025, CFO Steddum sold another 750 shares for approximately $970,000, and Officer Micheal W. Dobbs sold 1,150 shares for about $1.46 million. However, these sales represent relatively small amounts compared to the company's overall value and likely reflect personal asset management or compensation plan distributions. $TPL's financial performance has been impressive. In 2023, the company reported revenue of $631.6 million and net income of $405.6 million. For Q2 2024, it posted adjusted EPS of $4.98, growing from $4.35 in the same period the previous year, while Q3 saw revenue of $173.6 million and net income of $106.6 million. The company also demonstrated commitment to shareholder returns by announcing a special dividend of $10 per share in June 2024. Another significant factor influencing $TPL's stock price surge was its inclusion in the S&P 500 index in November 2024, which substantially increased the company's visibility and institutional investor interest. Curiously, the stock actually dropped 4.6% on its first trading day in the index, likely due to short-term profit-taking. However, this index inclusion is expected to be a positive factor for $TPL in the long run. From an energy industry perspective, fluctuations in oil and gas prices directly impact $TPL's royalty income. Over recent months, U.S. energy companies have experienced ups and downs based on economic conditions and supply-demand forecasts. On March 13, 2025, U.S. energy firms declined due to economic concerns and supply-demand expectations, but then rebounded on March 26 due to falling crude oil inventories and Venezuelan supply issues. Despite this volatility, $TPL's business model, with its low operating costs and high profitability, has delivered relatively stable performance. Additionally, $TPL is exploring new revenue streams, such as leasing land for data centers, which could diversify its business. According to reports from November 2024, the company is exploring opportunities for data center leases on its extensive land holdings. Considering the insider trading patterns holistically, the consistent buying by major shareholders and directors demonstrates confidence in the company's long-term prospects, while the selective selling by some executives appears to be for personal financial management. Particularly telling is that insider buying continued even during periods of stock price decline, suggesting insiders are focused on the company's long-term value rather than short-term price movements. $TPL's future outlook will be influenced by various factors including oil and gas industry trends, production volumes in the Permian Basin, and water demand, but given the persistent insider buying and robust business model, it remains an attractive company for long-term investors. However, with the P/E ratio now exceeding 66 following the significant price appreciation, the high valuation is something new investors should carefully consider.

You can receive notifications when news is published.