TPL

Texas Pacific Land ($TPL) Insiders' Daily Buying Spree Exceeds 200 Transactions - Is 40% Correction an Opportunity?

06/25/2025 03:57

Texas Pacific Land Corporation ($TPL) is drawing investor attention not just for its stock price movements, but for an extraordinary pattern of insider buying that defies conventional trading norms. Texas Pacific Land, established in 1888, is a unique land ownership and resource management company operating primarily in Texas's Permian Basin. The company owns approximately 873,000 surface acres and 207,000 net royalty acres, generating revenue through oil and gas royalties, land leases, and water services rather than direct petroleum production. This distinctive business model creates stable cash flows from land ownership rights. An analysis of insider trading data reveals a remarkable pattern. Major shareholder Horizon Kinetics Asset Management LLC has been consistently purchasing 3 shares or 1 share almost daily since June 3, 2024. Even more noteworthy is the behavior of Director Murray Stahl, who has purchased 10-12 shares almost every day from August 16, 2024, through June 24, 2025, totaling over 200 transactions. This small-lot accumulation strategy differs dramatically from typical insider trading patterns. To understand this persistent buying, one must know Murray Stahl's background. He is co-founder and portfolio manager of Horizon Kinetics, renowned for value investing, and has been active on Wall Street for over 20 years. Horizon Kinetics currently holds approximately 16% of TPL shares as a major stakeholder, while Stahl serves as a TPL board member. Given his past investment performance, such extremely consistent buying appears based on deep conviction rather than casual investment. The stock price movement clarifies the reasoning behind this conviction. TPL shares surged from around $570 in early June 2024 to over $700 on June 10, continuing to rise to over $1,700 in November 2024 before settling at current levels of $1,050-1,100. Despite a roughly 40% correction from peaks, the stock remains nearly double year-ago levels. Particularly notable is that insider buying continued even during price corrections. Stahl maintained his purchasing pattern after the November 2024 peak, continuing through June 2025. This suggests confidence in long-term value rather than short-term price movements. TPL's financial position supports this confidence. Q1 2025 revenue reached $196 million (up 13% year-over-year) with earnings per share of $5.25. The company maintains zero debt, holds $460 million in cash, and achieves operating margins exceeding 63%. While the dividend yield is modest at 0.6%, the payout ratio of just 27.7% provides ample room for future dividend growth. However, investors should consider certain cautions. TPL's current P/E ratio of 52.9x represents a significant premium to typical energy companies. The price-to-sales ratio of 33.2x suggests growth expectations are already substantially reflected in the stock price. Q2 2024 results missed analyst expectations for both revenue and earnings per share. TPL's future growth drivers are diverse. Beyond traditional oil and gas royalty income, opportunities include increased Permian Basin drilling activity, expanded water treatment services, and emerging AI data center leasing on company land. The potential for data center development on owned property could become a significant new revenue source. How should investors interpret the current situation? The extremely consistent insider buying pattern is undoubtedly positive, especially when experienced value investors like Murray Stahl continue purchasing during price corrections, demonstrating strong conviction in long-term value. Additionally, debt-free operations and solid cash flows provide stability amid economic uncertainty. Conversely, current valuations reflect substantial growth expectations. Near-term variables include sustained high oil prices, Permian Basin drilling activity levels, and data center business progress. H2 2025 earnings reports and management guidance updates will be crucial decision factors. In conclusion, while TPL represents an attractive investment opportunity with its unique business model and solid financial structure, the current price demands careful consideration. Insider buying persistence is positive from a long-term perspective, but given valuation concerns, strategies involving dollar-cost averaging or waiting for further price corrections may prove prudent.

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