TPL

Texas Pacific Land ($TPL) Insiders Keep Buying Despite 125% Stock Surge: Major Shareholders Signal Long-Term Confidence

04/02/2025 18:18

Texas Pacific Land Corporation ($TPL) has demonstrated remarkable stock growth over the past 18 months, climbing from around $580 in early June 2024 to over $1,350 by early April 2025, along the way earning inclusion in the S&P 500 index. Throughout this impressive journey, one noteworthy pattern has emerged: consistent insider buying. TPL operates with a business model distinct from typical energy companies. The corporation owns approximately 880,000 acres of land in the Permian Basin of Texas, generating revenue primarily through oil and gas royalties and water services. This asset-based business model provides lower operating costs and more stable cash flows than traditional energy producers. Examining insider trading data reveals that major shareholder Horizon Kinetics Asset Management LLC and director Murray Stahl have consistently purchased small amounts of stock from June 2024 to present. Specifically, Stahl typically bought 10-12 shares at a time, while Horizon Kinetics regularly purchased 1-3 shares. What's particularly noteworthy is that these purchases continued steadily even as the share price surged. This pattern signals strong confidence in the company's long-term value at current price levels. It's worth noting that Murray Stahl has connections to Horizon Kinetics, potentially resulting in some duplicate reporting of transactions. According to public disclosures, Horizon Kinetics holds approximately 16% of TPL's outstanding shares. However, not all insiders have been buyers. Notable selling includes CAO Stephanie Buffington's disposal of 210 shares in November 2024, CFO Chris Steddum's sales totaling 1,100 shares across two transactions (November 2024 and March 2025), and officer Micheal Dobbs's sale of 1,150 shares in March 2025. These executive sales predominantly occurred when TPL was approaching historical price highs. The correlation between stock performance and insider trading patterns is particularly interesting. TPL rocketed to $1,726 per share on November 22, 2024, and was subsequently added to the S&P 500 on November 26. However, the stock declined 4.6% on its first day in the index and experienced a correction over the following weeks. Throughout this correction, the pattern of insider buying continued unabated. Financially, TPL stands on exceptionally solid ground. The company's most recent trailing twelve months shows $705.82 million in revenue with $453.96 million in net income, translating to an impressive 64.32% net profit margin. Additionally, the company operates with zero debt and announced a special dividend of $10 per share in June 2024. Within the broader industry context, TPL maintains a unique positioning despite energy sector volatility. Even with recent energy price declines, the company's low operating costs and royalty-based revenue model provide more consistent cash flow than traditional energy producers. Recent news also indicates the company is exploring new business opportunities like data center leasing by leveraging its vast land holdings. Investors should, however, exercise caution regarding valuation. TPL currently trades at a P/E ratio of 66.1x and a P/S ratio of 42.5x, significantly above market averages. These metrics suggest the market has priced in substantial future growth expectations, creating potential downside risk if results fail to meet these lofty expectations. In conclusion, TPL's insider trading pattern suggests strong confidence from major shareholders and directors in the company's long-term value and growth potential. Simultaneously, select executive sales might reflect some caution about current high valuations. Given energy sector uncertainties and elevated valuation metrics, investors should carefully weigh these insider signals when making investment decisions regarding TPL.

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