TPL

Texas Pacific Land ($TPL) Insiders' 200+ Purchase Streak Continues Despite 40% Correction from Highs

06/30/2025 10:27

Texas Pacific Land Corp ($TPL) is a unique company owning 873,000 acres of land in the Permian Basin. Founded in 1888, this company operates a capital-light business model generating revenue through land leasing, royalty income, and water services, unlike traditional oil and gas producers. Over the past year, $TPL shares have shown dramatic volatility, surging nearly 3x from $580 in June 2024 to $1,723 in November following a $10 special dividend announcement, before correcting to current levels around $1,055. Amid this price volatility, the consistent buying behavior of insiders stands out remarkably. Major shareholder Horizon Kinetics Asset Management has been purchasing shares almost daily since June 2024, while director Murray Stahl has executed over 200 purchase transactions from August 2024 through June 2025. Notably, Stahl continued buying even at November 2024 peaks and throughout the 2025 correction period, demonstrating conviction beyond routine purchase plans. Conversely, some executive selling has occurred. In November 2024, CAO Stephanie Buffington sold 210 shares for approximately $290,000, and CFO Chris Steddum sold 350 shares for $469,000. In March 2025, officer Micheal Dobbs sold 1,150 shares for $1.46 million, while the CFO sold an additional 750 shares for about $970,000. However, these selling volumes remain relatively limited compared to the scale of continuous insider purchases. Investors should carefully examine $TPL's elevated valuation metrics. The current price-to-earnings ratio of 52.8x represents a significant premium to typical energy companies. The price-to-sales ratio of 33.4x also far exceeds the industry average of 2-5x, reflecting investor expectations for the company's unique business model and growth prospects. Recent earnings show Q1 2025 adjusted core profit of $169.4 million, missing Wall Street estimates of $180 million, primarily due to a 7.5% decline in oil prices to $71.05 per barrel. However, net income rose 5.4% year-over-year to $120.7 million, supported by higher production volumes and natural gas price increases. $TPL's core strength lies in its robust financial structure with zero debt. Cash holdings total $460 million, with an exceptional EBITDA margin of 81.3%. The royalty revenue structure enables continuous cash generation without capital investment, making it relatively less sensitive to economic cycles. Key factors to watch include sustained drilling activity in the Permian Basin, expansion of water services operations, and new growth drivers including data center leasing. The company is diversifying revenue streams beyond traditional oil and gas through AI infrastructure and bitcoin mining contracts, while also exploring carbon capture and storage (CCS) opportunities through underground space leasing. Near-term challenges include July tariff policy uncertainties and oil price volatility. However, considering the persistent insider buying patterns and the company's unique competitive advantages, current price levels may present attractive entry opportunities for long-term investors. Investors should monitor whether the valuation premium remains sustainable and whether new growth initiatives can translate into actual revenue streams.