TPL

Texas Pacific Land ($TPL) Director's 300-Day Buying Spree Continues...Royalty King's Confidence Unwavering

05/28/2025 16:10

$TPL (Texas Pacific Land Corporation) shares are trading around $1,243 as of late May 2025, marking over 100% gains in the past 12 months. This performance significantly outpaces the S&P 500's annual returns, drawing investor attention particularly amid the energy sector rally following the US-EU tariff delay announcement in late May. Texas Pacific Land Corporation, founded in 1888, operates a unique energy business model based on land ownership in the Permian Basin of Texas. The company holds approximately 873,000 surface acres and 207,000 net royalty acres. Unlike traditional oil producers, TPL operates a royalty-based revenue model centered on land ownership. Primary revenue streams include oil and gas royalties, pipeline and utility easements, commercial leases, and sales of construction materials like sand and caliche. Through its subsidiary Texas Pacific Water Resources, the company also provides water sourcing, produced water treatment, infrastructure development, and disposal services to oilfield operators, achieving revenue diversification. The most notable aspect is the company's insider trading patterns. Board member Murray Stahl has been purchasing 10-12 shares almost daily since August 2024. According to SEC filings, Stahl has continued buying without missing a single day through May 27, 2025, representing millions of dollars in total investment. These purchases follow 10b5-1 plans adopted in May and November 2024, demonstrating a systematic, pre-planned trading strategy. Simultaneously, major shareholder Horizon Kinetics Asset Management LLC has been consistently making small purchases since June 2024, revealing strong insider confidence in the company's prospects. Murray Stahl is more than just a director. As Chairman, CEO, and Chief Investment Officer of Horizon Kinetics, he brings over 20 years of Wall Street experience as a veteran investor. Horizon Kinetics holds approximately 16% of TPL shares as one of the largest shareholders, and Stahl's continuous personal purchases demonstrate his professional conviction and belief in long-term value creation. Notably, their buying has remained consistent regardless of stock price volatility. They continued purchasing as shares rose from the $700s to the $1,400s, suggesting insiders believe there's further upside potential even at current price levels. TPL's financial performance supports this insider confidence. Q1 2025 revenue increased 13% year-over-year to $196 million, while net income grew 5.4% to $120.7 million. On an annual basis, the company generated $727.66 million in revenue and $460.2 million in net income, achieving an impressive profit margin exceeding 63%. Return on equity (ROE) reaches approximately 39.5%, far above the industry average of 14%. More impressively, the company maintains debt-free operations with $460.38 million in cash holdings and only $115.6 million in total liabilities, indicating very high financial stability. However, some concerns exist. Q1 2025 adjusted core profit of $169.4 million missed Wall Street estimates of $180 million, primarily due to declining oil prices (down 7.5% to $71.05 per barrel). Additionally, valuation metrics appear stretched with a P/E ratio exceeding 61x. Some executive selling is also notable, with CFO Chris Steddum selling shares in November 2024 and March 2025, and CAO Stephanie Buffington selling in November 2024. However, these appear to be part of executive compensation plans, with purchases overwhelmingly dominating overall insider trading activity. The broader energy sector has shown mixed performance in 2025. Trump administration tariff policies and Venezuela sanctions are affecting oil prices, while energy stocks have rebounded following the late-May EU tariff delay announcement. TPL's position as a royalty recipient rather than direct oil producer offers relatively stable cash flows. With Permian Basin production continuing to increase and the company's water services business providing growth momentum, long-term prospects appear positive. Investors should note TPL's differentiated business model. While typical E&P companies face direct exposure to oil price volatility, TPL maintains a royalty-based stable revenue structure. Its holdings of over 873,000 acres represent assets that can be utilized for various purposes including oil and gas, renewable energy, and data centers. The company reinvests approximately 77% of profits for growth while returning the remainder to shareholders as dividends. Current annual dividends are $6.40 per share, yielding approximately 0.51%. Institutional ownership of 71% provides another positive signal, showing professional investors recognize TPL's long-term value. Beyond Horizon Kinetics, numerous institutional investors hold stakes, supporting stock stability and liquidity. The next earnings announcement is scheduled between August 5-11, with Q2 results and management's second-half guidance expected to draw significant attention.

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