TPL

Texas Pacific Land ($TPL): Daily Insider Buying vs 40% Stock Plunge Dilemma

06/26/2025 03:46

Insider trading data from Texas Pacific Land Corp ($TPL) is sending important signals to investors. This unique land and resource management company owns approximately 870,000 surface acres and 207,000 net royalty acres in the Texas Permian Basin, generating stable cash flows through oil and gas royalties and water services. The most notable pattern is the systematic and persistent buying by Director Murray Stahl and major shareholder Horizon Kinetics Asset Management. Murray Stahl has been purchasing shares almost daily since August 2024, continuing his buying spree under a 10b5-1 plan adopted on November 21, 2024. This represents systematic investment based on long-term conviction rather than market timing. Horizon Kinetics, holding a 16% stake in TPL, has been consistently purchasing small amounts since June 2024. Initially buying 3 shares at a time, recently scaling down to 1 share per transaction, indicating sustained commitment to increasing their position despite stock price appreciation. Notably, their buying pattern has remained consistent regardless of price fluctuations. However, some executive selling has also been observed. In November 2024, CFO Chris Steddum sold $350,000 worth of shares and CAO Stephanie Buffington sold $290,000 worth. In March 2025, Officer Micheal Dobbs sold $1.46 million and the CFO sold an additional $970,000. While these sales likely relate to stock compensation programs or personal financial needs, they create mixed signals in insider trading direction. Investors should monitor changes in Murray Stahl's buying pattern as a key indicator. He reduced his typical purchase size from 12 shares to 10 shares recently, likely a natural adjustment to higher prices. Any cessation or significant reduction in this buying pattern could signal changes in insider confidence. Yet TPL faces significant challenges. The energy sector has struggled in 2025 with oversupply concerns and declining oil prices, causing TPL shares to fall nearly 40% from November 2024 highs around $1,700 to current levels around $1,036. The company's Q1 2025 results also missed analyst expectations due to lower oil prices. Nevertheless, TPL's fundamentals remain solid. The company maintains a debt-free balance sheet with $460 million in cash, achieving 39.52% ROE and 76.69% operating margins. The capital-light business model generating royalty income regardless of production volume appears to underpin insiders' continued buying confidence. In an optimistic scenario, energy market recovery could lead to revaluation of TPL's unique asset base. Continued Permian Basin development ensures stable royalty income, while the expanding water services business provides additional growth drivers. Sustained insider buying confidence would serve as a powerful bullish signal. Conversely, risk scenarios include accelerated energy transition reducing fossil fuel demand and slower Permian development. The current 51x P/E multiple could amplify declines during earnings disappointments. Any cessation or significant reduction in insider buying would weaken core investment thesis support. Overall, TPL presents a situation where strong positive signals from persistent insider buying coexist with sector headwinds. While insider confidence based on solid business fundamentals is attractive, the high valuation and energy sector uncertainties warrant cautious approach.