TPL

Texas Pacific Land($TPL): Value Investing Legend Murray Stahl's Year-Long Daily Buying Spree..."Still Undervalued at Current Levels"

07/05/2025 03:57

The buying spree by Texas Pacific Land Corporation's ($TPL) director Murray Stahl and major shareholder Horizon Kinetics Asset Management has been relentless for over a year. Insider trading records from June 2024 to July 2025 show their buying frequency and scale reaching unprecedented levels in the market. Texas Pacific Land, founded in 1888, is a unique energy company that owns approximately 880,000 acres in the Permian Basin, America's largest oil and gas producing region. Instead of direct oil production, its business model centers on collecting land use fees and royalties, achieving an impressive 63% profit margin. The company maintains a debt-free balance sheet with $460 million in cash, demonstrating exceptional financial health. Murray Stahl, chairman of value-investing firm Horizon Kinetics and TPL director, has been buying TPL shares almost daily since June 2024. His purchases, though small in individual amounts, are consistent and persistent, continuing even on days when the stock price declines. This isn't mere portfolio adjustment but demonstrates unwavering conviction in long-term value. Notably, TPL's share price surged to $1,723 in November 2024 before experiencing significant correction in 2025. The current level around $1,075 represents approximately 37% decline from the peak. Yet insider buying continues throughout this correction phase, suggesting they still view current price levels as undervalued. TPL's business model differs from traditional oil companies. Without direct production operational risks, it generates stable cash flows through royalty income. Recently, its water services business has grown significantly, recording 800,000 barrels per day in water sales. This reflects surging water demand in the Permian Basin's active shale development. The 2024 S&P 500 inclusion marked an important milestone. Institutional investor interest has increased, improving liquidity. Indeed, institutional ownership reaches 71%. However, this also means potential volatility driven by institutional trading patterns. TPL's current P/E ratio of 54 times is quite elevated. This indicates market recognition of TPL's growth potential but also implies high expectations with significant disappointment risk. Analysts' average price target of $917 sits about 15% below current levels, acknowledging valuation concerns. Despite this, confident insider buying continues. Murray Stahl has maintained purchases into 2025, sometimes increasing purchase amounts. This reflects value investor focus on long-term worth over short-term price movements. For investors, TPL presents an intriguing opportunity. Its unique business model, strong financial health, and persistent insider buying are positive factors. However, high valuation and recent price correction warrant careful consideration. Those considering purchases at current levels should adopt a gradual, long-term approach similar to the insiders.