TPL

Texas Pacific Land ($TPL): What Director's 11-Month Daily Buying Spree Really Means

07/10/2025 05:53

Texas Pacific Land ($TPL) is a unique land management company that owns approximately 207,000 net royalty acres and 880,000 surface acres in the Permian Basin of Texas. Unlike traditional oil and gas companies, TPL operates a capital-light business model generating revenue through royalties, leases, and water services without directly engaging in exploration or production. With a market capitalization of $29.04 billion, this large-cap stock has outperformed the S&P 500 by over 40% in the past year. The most notable aspect is Director Murray Stahl's extraordinarily consistent buying pattern. From August 16, 2024, to July 9, 2025, he has purchased shares almost daily for approximately 11 months, with over 200 total transactions. This systematic buying follows a Rule 10b5-1 trading plan adopted on November 21, 2024, which automatically executes purchases based on predetermined criteria regardless of market conditions. Remarkably, Stahl has continued buying even as the stock declined roughly 40% from its November 2024 peak of $1,723 to the current $1,047, demonstrating strong conviction in the company's long-term value. Major shareholder Horizon Kinetics Asset Management has also maintained consistent small-scale purchases. From June 2024 to February 2025, they bought 1-3 shares almost daily, holding a total 16% stake. This aligns with Murray Stahl's role as a portfolio manager at Horizon Kinetics, reflecting a consistent investment philosophy. In contrast, executive actions present a different picture. In November 2024, CFO Chris Steddum and CAO Stephanie Buffington sold shares worth approximately $470,000 and $290,000 respectively near the stock's peak. In March 2025, Officer Micheal Dobbs executed a substantial sale worth $1.46 million. These transactions suggest executives took profits at elevated valuations, contrasting with the directors' continuous buying. The company's financial health is exceptional. Trailing twelve-month revenue reached $727.76 million with a remarkable 63.24% net profit margin, significantly above industry averages. The company maintains a debt-free balance sheet with $460.38 million in cash reserves, providing excellent financial stability. The royalty-based revenue structure requires minimal capital expenditure while generating strong cash flows. However, investors should note certain risks. The current P/E ratio of 52.35x suggests potentially excessive growth expectations. Additionally, exposure to oil and gas price volatility affects royalty income, and the broader energy transition trend poses long-term risks. Recent market conditions show mixed performance for U.S. energy stocks in July 2025, with supply concerns and demand signals creating volatility. $TPL is not immune to these sector dynamics. However, the company's diversification efforts into data center leasing and renewable energy projects provide positive long-term growth drivers beyond traditional energy. Investors should carefully monitor when Stahl's automatic buying plan might conclude and whether current price levels represent a floor. The key question is whether the directors' persistent buying signals genuine bottom-fishing or merely mechanical execution. While the company's unique business model and strong financial position are attractive, the current valuation levels warrant cautious consideration.