TPL

Texas Pacific Land ($TPL) Director Invests $1.5M Over 10 Months of Daily Buying...Unwavering Conviction Despite 35% Plunge from Peak

06/20/2025 03:58

Murray Stahl, a director at Texas Pacific Land ($TPL), has been buying shares almost daily since August 2024. This represents one of the most concentrated insider buying campaigns in U.S. market history, with a single insider investing over $1.5 million across 10 consecutive months. For investors, this sends a clear signal - someone with the deepest knowledge of the company's inner workings shows unwavering conviction even as the stock plummeted. Texas Pacific Land, founded in 1888, is a unique land management company controlling 873,000 acres (approximately 1,400 square miles) in Texas's Permian Basin. This vast territory, six times the size of Seoul, generates diversified revenue streams. Unlike traditional oil companies, TPL operates as a landowner collecting oil and gas royalties, providing water services, leasing land, and selling construction materials. The company maintains a debt-free balance sheet with a $29 billion market cap and $460 million in cash reserves. So why has the stock fallen 35% from its peak? After reaching $1,723 in November 2024, shares have declined to around $1,080 as of June 2025. The 4.6% drop on its first day of S&P 500 inclusion added to investor concerns. A combination of broader energy sector weakness, declining oil prices, and cooling expectations around AI data center opportunities contributed to the decline. Yet this timing makes Murray Stahl's buying even more remarkable. Stahl's buying pattern reveals fascinating insights. He consistently purchased shares in the $1,100-$1,400 range, often increasing his buying when prices declined. When shares fell below $1,000 in early April, he bought 12 shares daily instead of his usual 10. This suggests not portfolio rebalancing but conviction-based investing. Intriguingly, other executives took opposite actions during the same period. In November 2024, CFO Chris Steddum sold $560,000 worth of stock, while CAO Stephanie Buffington disposed of $290,000. In March 2025, officer Micheal Dobbs executed a massive $1.46 million sale. This divergence in insider behavior suggests differing views on the company's prospects even among insiders. Yet Stahl continued buying through these selling periods. Investors should particularly note the valuation opportunity at current prices. While $TPL trades at 54 times trailing earnings, its forward P/E of 37.7 times suggests improving profitability ahead. Analyst consensus targets of $917 per share represent a 15% discount to current levels, but this may reflect conservative assumptions given the company's unique business model and emerging growth drivers. $TPL's greatest competitive advantage lies in its irreplaceable land assets. The Permian Basin ranks as America's largest oil-producing region, generating steady royalty income regardless of oil price volatility. More intriguingly, rising AI data center demand creates new opportunities. TPL's vast acreage with power infrastructure access provides ideal conditions for data center development. Bitcoin mining and renewable energy projects offer additional revenue potential. Key investment criteria for current consideration include both positive signals and risk factors. Positive indicators include Stahl's persistent buying, the debt-free financial structure, diversified revenue streams, and emerging growth catalysts. Risk factors encompass high valuation multiples, oil price exposure, and speculative elements in AI-related expectations. Recent quarterly results slightly missing analyst estimates could also pressure near-term performance. In an optimistic scenario, oil price recovery, increased Permian Basin activity, successful AI data center contracts, and S&P 500 inclusion benefits could drive substantial gains. The base case scenario suggests sideways trading while fundamentals improve. A risk scenario could see further declines from oil price collapses, reduced energy investment, or disappointed new business expectations. The key consideration is investment timeframe. Stahl's actions reflect a long-term investor's perspective, betting on intrinsic value and long-term growth potential rather than short-term price movements. Investors should similarly approach with at least a 2-3 year investment horizon. While current price levels may offer attractive entry points for patient investors, near-term volatility remains likely.

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