TPL

Texas Pacific Land ($TPL) Insiders Display Strong Confidence Through Persistent Share Purchases Despite 300% Stock Rally

04/01/2025 16:46

Texas Pacific Land Corp ($TPL) insiders have been steadily accumulating shares even as the stock price has climbed substantially, signaling strong internal confidence in the company's long-term prospects. Particularly noteworthy is the consistent buying pattern from major shareholders and board members. TPL's stock has demonstrated remarkable performance, surging from around $580 in early June 2024 to approximately $1,300 by late March 2025. The company achieved a significant milestone in November 2024 when it was added to the S&P 500 index. Despite this strong performance, company insiders have continued to purchase shares. Horizon Kinetics Asset Management LLC, a major shareholder currently holding approximately 16% of TPL's stock, has consistently bought small quantities of shares from June 2024 through February 2025. While these purchases were modest—typically 1-3 shares per transaction—their consistency is noteworthy. Even more significant is the buying pattern of Director Murray Stahl, who also serves as Chairman and CEO of Horizon Kinetics. Stahl has regularly purchased 10-12 shares almost daily from August 2024 through March 2025. Most of these transactions were executed under a Rule 10b5-1 plan, indicating they were pre-planned rather than opportunistic trades, suggesting a long-term investment strategy rather than short-term market timing. Texas Pacific Land is one of the largest landowners in Texas, with approximately 880,000 acres in West Texas. The company generates revenue primarily through oil and gas royalties (about two-thirds of income) and water services (approximately 30% of income). TPL owns substantial land in the Permian Basin, where oil and gas discoveries have significantly boosted the company's revenues. Financially, TPL demonstrates remarkable strength. The company reported trailing twelve-month revenue of $705.82 million and net income of $453.96 million, achieving an impressive 64.32% profit margin. Perhaps most notably, the company carries no debt (0% debt-to-equity ratio). In June 2024, the company announced a special dividend of $10 per share, and in November 2024, it was included in the S&P 500 index. Although the stock dropped 4.6% on its first day of S&P 500 trading on November 26, 2024, this appears to have been a temporary adjustment. In fact, the stock was up more than 300% for the year 2024. Not all insider transactions have been purchases. CFO Chris Steddum sold a total of 750 shares (worth approximately $970,000) on March 14, 2025, and CAO Stephanie Buffington sold 210 shares (worth about $290,000) on November 12, 2024. However, these sales may reflect personal financial needs or diversification strategies and are relatively small compared to the overall pattern of insider buying. TPL has been exploring new business opportunities beyond its oil and gas royalty business, including potential data center leases on its extensive land holdings. This indicates the company is pursuing diversification strategies for long-term growth. Consistent insider buying is generally interpreted as a positive signal, reflecting insiders' confidence in the company's long-term outlook. Buying that continues even after significant price appreciation is an especially strong signal. However, investors should also consider TPL's high valuation (P/E of 66.1x, P/S of 42.5x) and risks associated with oil and gas price volatility. In conclusion, the insider trading pattern at Texas Pacific Land demonstrates internal confidence in the company's business model and long-term growth prospects. The continued buying by major shareholders and board members suggests a belief in the company's fundamental strength, which may serve as a positive indicator for long-term investors.

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