TPL

Texas Pacific Land ($TPL) Director Murray Stahl's Unusual Daily Buying Pattern Amid High Valuation Dilemma on AI Expectations

06/24/2025 03:59

Texas Pacific Land Corporation ($TPL) operates a unique business model, owning approximately 873,000 acres in the Permian Basin and generating revenue through oil and gas royalties and water services rather than direct production. Founded in 1888, the company has leveraged the Permian Basin energy boom through its differentiated structure of land leasing and royalty income. Recently, it has been expanding into AI data centers, bitcoin mining, and renewable energy projects. The most notable development is Director Murray Stahl's buying pattern. From August 2024 through June 2025, he has been purchasing 10-12 shares almost daily, which is extremely rare in insider trading. This consistent small-lot purchasing differs completely from typical one-time large acquisitions. Stahl serves as Chairman and CEO of Horizon Kinetics Asset Management, which holds a 16% stake as TPL's largest shareholder. His persistent buying signals strong conviction about the company's long-term prospects beyond mere investment considerations. However, other executives' actions during the same period tell a different story. CAO Stephanie Buffington sold 210 shares in November 2024, while CFO Chris Steddum sold 750 shares and Officer Micheal Dobbs sold 1,150 shares in March 2025. While these sales likely represent routine restricted stock exercises or portfolio adjustments, they contrast with Stahl's buying activity. The stock price movement provides context for these insider transactions. TPL shares surged nearly 300% from $580 in early June 2024 to a peak of $1,723 on November 22, driven by S&P 500 inclusion announcement and AI data center development expectations. Following subsequent correction, shares currently trade around $1,050. Stahl's continuous buying occurred throughout both the surge and correction phases, indicating this wasn't simple bottom-fishing. Financially, TPL maintains a solid foundation. TTM revenue reached $727.66 million, up 12.5% year-over-year, with net income of $460.2 million. The company carries zero debt while holding $460.38 million in cash, demonstrating exceptional financial stability. High profitability metrics include 76.69% operating margin and 63.24% net margin. However, valuation concerns emerge. Current P/E of 52.53x and P/S of 33.21x significantly exceed traditional energy companies, reflecting AI data center growth expectations while embedding risk if these expectations aren't realized. The key metric investors should monitor is concrete progress in AI-related business development. How much of the company's 873,000 acres can actually be utilized for data center sites, and when revenue generation will materialize, remains crucial. If specific AI data center contracts or development plans aren't announced within six months, the current high valuation may face correction pressure. Conversely, the positive scenario involves combining continued Permian Basin energy development with rising AI infrastructure demand to provide additional growth drivers. U.S. AI competitiveness policies and data center infrastructure expansion needs could further enhance TPL's land value. The most likely scenario involves near-term sideways trading within current ranges, with direction determined by substantial progress in AI-related business. Stahl's persistent buying signals confidence in long-term value despite this uncertainty. Currently, investors should closely monitor whether Stahl's buying pattern continues and watch for specific AI data center announcements. If his purchases cease or AI-related expectations turn to disappointment, significant stock price correction pressure is anticipated.

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