TPL

Unshaken Insider Confidence: Texas Pacific Land ($TPL) Key Insiders Maintain Steady Buying Through Wild Price Swings

04/07/2025 14:31

Texas Pacific Land ($TPL) shares have experienced a dramatic journey over the past 12 months. Trading at around $580 in early June 2024, the stock surged to over $1,700 by mid-November—a staggering 190% increase—before correcting to trade near $1,100 recently. Throughout these significant price fluctuations, insider trading patterns have shown remarkable consistency. Particularly noteworthy are the steady purchasing activities of board member Murray Stahl and major shareholder Horizon Kinetics Asset Management LLC. Over the past eight months, Stahl has consistently bought 10-12 shares almost daily, while Horizon Kinetics has maintained regular purchases of 1-3 shares. Significantly, these purchases continued unabated during both the rapid price appreciation phase and the subsequent correction period. Texas Pacific Land operates with a business model distinct from typical energy companies. Founded in 1888, the company owns approximately 880,000 acres of land in West Texas's Permian Basin, generating revenue primarily from oil and gas royalties and water services. Notably, TPL doesn't directly drill or produce oil; instead, it collects royalties, resulting in low operating costs and exceptionally high profitability. The company boasts operating margins exceeding 90% and net profit margins of approximately 64%. $TPL, which joined the S&P 500 index in November this year, has grown into a substantial corporation with a market capitalization approaching $30 billion. Board member Murray Stahl, who also serves as CEO of Horizon Kinetics, has documented his consistent purchases through SEC Form 4 filings. Most of his transactions were executed according to a Rule 10b5-1 plan—a legitimate method allowing insiders to trade based on predetermined schedules and prices to avoid insider trading suspicions. Interestingly, Stahl's purchasing pattern remained consistent regardless of price volatility. Whether the stock was breaking through $1,700 in November or falling to around $1,100 recently, his buying behavior remained unchanged, suggesting strong conviction in the company's long-term value. Horizon Kinetics Asset Management currently holds approximately 16% of $TPL shares. While Murray Stahl is the CEO of this firm, disclosure documents specify that he does not participate in investment decisions regarding TPL. Therefore, Stahl's personal purchases and Horizon Kinetics' institutional buying can be viewed as separate activities. In contrast, there were limited selling transactions by some executives. In November 2024, CFO Chris Steddum sold 350 shares, and CAO Stephanie Buffington sold 210 shares. These sales occurred when the stock price reached historic highs and can be interpreted as profit-taking. However, these selling transactions represent a very small portion of overall insider activity. Several factors contributed to $TPL's dramatic price appreciation. The foundation was laid by the company's unique business model, debt-free operations, and increased royalty income due to growing oil production in the Permian Basin. Additionally, inclusion in the S&P 500 served as a catalyst, significantly increasing institutional investor interest. Financially, $TPL stands on extremely solid ground. The company carries no debt and holds approximately $370 million in cash and short-term investments. With annual revenues of about $700 million, TPL announced a special dividend of $10 per share in June 2024. However, investors should be mindful of certain risk factors. Currently, $TPL's P/E ratio stands at 66, which is relatively high, and the company's earnings are subject to fluctuations in oil and gas prices. Furthermore, given the stock's rapid rise and subsequent correction, continued volatility may be expected. Nevertheless, the consistent buying by key insiders provides a strong signal of confidence in the company's long-term outlook. Murray Stahl, known for his value investing expertise, has demonstrated through his consistent purchasing that he believes the company's intrinsic value remains attractive. In its recently reported Q3 2024 results, $TPL recorded $174 million in revenue and $107 million in net income. Most earnings came from oil and gas royalties, with water services providing stable additional revenue. Looking ahead, $TPL's growth drivers include continued oil production increases in the Permian Basin and the exploration of data center leasing on its vast land holdings. The company is actively seeking new revenue streams leveraging its extensive property assets. In conclusion, Texas Pacific Land's insider trading patterns demonstrate that key insiders remain optimistic about the company's long-term prospects despite short-term price volatility. The consistent purchases by Murray Stahl and Horizon Kinetics provide evidence of their strong belief in the company's fundamental value and growth potential. However, investors should also consider risk factors including high valuation and energy price volatility.

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