TPL

Texas Pacific Land ($TPL): Director Murray Stahl Steadily Buys Shares For A Year Despite 22% Stock Decline

05/05/2025 15:38

Texas Pacific Land ($TPL) has seen consistent insider buying despite a significant correction from its November highs, highlighting strong confidence in the company's long-term value from key insiders, particularly board member Murray Stahl and major shareholder Horizon Kinetics Asset Management LLC. $TPL has retreated about 22% from its all-time high of $1,726 reached on November 22, 2024, to current levels around $1,346. Nevertheless, the stock remains up over 133% in the past 12 months, showcasing exceptional performance within the energy sector. Notably, since its inclusion in the S&P 500 index in November 2024, the stock experienced a temporary pullback but still maintains a year-to-date return of 18.76%, substantially outperforming the S&P 500's 3.72% gain. Texas Pacific Land operates with a unique business model that distinguishes it from typical energy companies. The company owns approximately 880,000 acres of land in the Permian Basin of West Texas, one of America's largest oil-producing regions. Rather than directly drilling for oil, $TPL generates revenue as a landowner by providing royalties and easements to oil and gas companies, along with water-related services. This asset-light business model translates into an impressive 64.32% profit margin and a 41.73% return on equity (ROE). Murray Stahl, a key figure in $TPL's insider transactions, is a co-founder of FRMO Corp (1990) and Chairman of Horizon Kinetics, renowned in value investing circles. Stahl has been regularly purchasing $TPL shares according to a Rule 10b5-1 plan over the past several months. From August 2024 through May 2025, he consistently bought 10-12 shares almost daily. Particularly noteworthy is his continued buying even during price declines, such as in early April 2025 when the stock fell below $1,200. Horizon Kinetics has followed a similar pattern, regularly purchasing 1-3 shares from June 2024 through February 2025. Their stake reportedly represents about 16% of TPL's total shares. According to insider trading data, these purchases were executed under 10b5-1 plans, which establish predetermined schedules and prices for stock transactions to avoid market manipulation concerns. Meanwhile, some executive sales have also occurred. In November 2024, CAO Stephanie Buffington sold 210 shares for approximately $291,713, and CFO Chris Steddum disposed of 350 shares for about $469,000. In March 2025, officer Micheal W. Dobbs sold 1,150 shares for approximately $1.46 million, and CFO Steddum sold an additional 750 shares. However, these sales represent relatively small volumes compared to overall insider activity and likely reflect personal portfolio management decisions. $TPL's financial performance remains impressive. For Q3 2024, the company reported $173.6 million in revenue and $106.6 million in net income. On a trailing twelve-month basis, it achieved $705.82 million in revenue and $453.96 million in net income. This high profit margin is attributable to low operating costs and a fixed-asset-centric business model. Currently, $TPL trades at a P/E ratio of 66.81, significantly higher than typical energy companies. However, this premium valuation reflects the company's unique business model and exceptional profit margins. The company also announced a special dividend of $10 per share in June 2024. From an energy sector perspective, $TPL has demonstrated relatively stable performance despite recent oil price fluctuations. The company benefited when U.S. energy firms rose following Donald Trump's cancellation of Chevron's Venezuela license in early 2025, which raised supply concerns. However, since April, energy stocks, including $TPL, have been impacted by increasing supply and tariff uncertainties. Considering insiders' consistent buying and future outlook, several key factors emerge. First, $TPL's asset value heavily depends on the Permian Basin's long-term importance. If U.S. energy independence and export expansion policies continue, this region's significance will likely grow. Additionally, the company is diversifying revenue streams through supplementary businesses like water-related services. In the near term, oil price volatility and inventory levels may influence $TPL's stock price. However, continued insider buying signals confidence in the company's long-term value beyond short-term fluctuations. From a long-term perspective, $TPL's business model demonstrates adaptability even in an energy transition era. The vast Permian Basin landholdings could potentially be repurposed for renewable energy projects or data centers. In fact, the company is reportedly exploring data center leasing opportunities. In conclusion, $TPL's insider trading patterns demonstrate strong confidence in the company's value. Despite short-term price volatility, consistent insider buying serves as a positive signal for long-term growth potential. However, given the high valuation and energy market volatility, investors should approach cautiously, aligning with their investment objectives and risk tolerance.

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