TPL

Texas Pacific Land ($TPL) Sends Strong Investment Signal with Director Murray Stahl's Year-Long Consecutive Buying Spree

06/18/2025 04:15

Texas Pacific Land Corporation ($TPL) is capturing significant investor attention with its unique business model and compelling insider trading patterns. Founded in 1888, this distinctive energy company operates differently from traditional oil and gas producers by owning approximately 870,000 surface acres in the prolific Permian Basin and generating revenue through royalties rather than direct production operations. The company's diversified revenue streams include oil and gas royalties, pipeline easements, commercial leasing, and water services. The most striking aspect for investors is the overwhelming insider buying activity. Over the past year from June 2024 to June 2025, there were more than 140 insider transactions, with only 5 sales against a massive wave of purchases. Director Murray Stahl has been purchasing $TPL shares almost daily since August 2024 through June 2025, spending $10,000-15,000 per trading day even as the stock price climbed from $800 to $1,400. While executed under a Rule 10b5-1 plan, this relentless buying despite significant price appreciation demonstrates extraordinary management confidence. Major shareholder Horizon Kinetics Asset Management LLC has also been steadily accumulating shares throughout this period. Holding approximately 16% of TPL, they continue purchasing even at elevated price levels. Given Murray Stahl's connection to Horizon Kinetics, this appears to be conviction-based investing rather than mere financial positioning. $TPL's financial strength amplifies its investment appeal. The company maintains zero debt while generating $727.76 million in trailing twelve-month revenue. With a net profit margin of 63.24% and operating margin of 76.69%, profitability metrics far exceed industry peers. Cash holdings of $460.38 million and a current ratio of 7.80 demonstrate exceptional financial stability. Return on equity of 39.52% and return on assets of 26.72% showcase superior capital efficiency. Revenue diversification adds another positive dimension. Beyond traditional oil and gas royalties, the water services segment is experiencing rapid growth. As environmental regulations tighten in the Permian Basin, demand for produced water treatment is increasing, and $TPL has secured a leading position in this expanding market. Additionally, land leasing and material sales provide steady cash flows. Key indicators investors should monitor include insider buying patterns accelerating if $TPL drops below $1,100, given Murray Stahl's recent purchase prices ranging from $1,100-1,400. Water services segment revenue growth maintaining above 20% quarterly growth rates will signal business momentum. Dividend policy changes also warrant attention, as the current 0.59% yield with only 27.7% payout ratio suggests significant room for increases. Risks are evident, primarily centered on high valuation multiples. A P/E ratio of 54.35x and P/S ratio of 34.57x represent substantial premiums to industry peers, potentially reflecting excessive growth expectations. Commodity price volatility also directly impacts royalty revenues, as demonstrated by Q1 core earnings missing Wall Street estimates due to lower oil prices. However, the positive scenario appears more compelling. Permian Basin production continues expanding, while the water services market provides new growth drivers. Most importantly, continuous insider buying signals upside potential even at current price levels. Murray Stahl, founder of Horizon Kinetics and renowned value investor, represents conviction-based accumulation rather than portfolio rebalancing. $TPL offers a unique investment opportunity distinct from traditional energy companies. The combination of land ownership-based stable revenue, debt-free operations, and exceptional profitability creates a rare investment proposition. The overwhelming insider buying surge suggests investment value persists at current price levels, though high valuation warrants dollar-cost averaging or waiting for price corrections.

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