TPL - Texas Pacific Land Trust

[Gregmal]

Yea I'm in this too, so Im not trying to be too much of a negative Nancy. But I am just a tad annoyed because this used to be an investment you didnt have to do anything with. Now you have to keep an eye on it. I still think it does well but the management/trustee behavior during the proxy fight was horrible and its very easy for companies to get carried away with "growth". I also didnt like how they just straight up stopped repurchasing shares even though its been a mandate seemingly forever. Just a little cold water on the bull case, thats all.

[DooDiligence]

Yea I'm in this too, so Im not trying to be too much of a negative Nancy. But I am just a tad annoyed because this used to be an investment you didnt have to do anything with. Now you have to keep an eye on it. I still think it does well but the management/trustee behavior during the proxy fight was horrible and its very easy for companies to get carried away with "growth". I also didnt like how they just straight up stopped repurchasing shares even though its been a mandate seemingly forever. Just a little cold water on the bull case, thats all.

 

Great discussion  ;)

[Sportgamma]

Hopefully they'll start repurchases after the conversion is completed.

[DooDiligence]

Hopefully they'll start repurchases after the conversion is completed.

 

I tried to find a copy of the new corporate charter but couldn't.

 

I did find this though.

 

https://tpltblog.com

[Castanza]

Touching ATHs  :D

[Arski]

Touching ATHs  :D

 

What are ATHs?

[Agrippa07]

Touching ATHs  :D

 

What are ATHs?

 

All time highs  :)

[elevensecsrt4]

All time highs and Murray Stahl is buying literally everyday.  call on oil prices

[Castanza]

178% since March lows

 

100% in last three months

[aryadhana]

Thoughts on how to value this?  I bought a lot of TPL end of last year when the price was low enough that I didn't need to know much to feel comfortable but think its time to reevaluate.  The growth, tons of unencumbered free cash flow, and low capex requirements are obviously amazing.  On the other hand it's a depleting resource.  It's also just a peculiar stock.  There still aren't any listed options, the spreads are ridiculous during market hours and not even remotely reasonable in premarket or aftermarket - all very odd for a $11bn company on the NYSE. 

 

Just keeps going up and up. 

[Arski]

Thoughts on how to value this?  I bought a lot of TPL end of last year when the price was low enough that I didn't need to know much to feel comfortable but think its time to reevaluate.  The growth, tons of unencumbered free cash flow, and low capex requirements are obviously amazing.  On the other hand it's a depleting resource.  It's also just a peculiar stock.  There still aren't any listed options, the spreads are ridiculous during market hours and not even remotely reasonable in premarket or aftermarket - all very odd for a $11bn company on the NYSE. 

 

Just keeps going up and up.

 

For me, I think it's an amazing business. They have a lot of Drilled but Uncompleted wells (DUCs), that means there is a lot of oil that can be drilled on TPL's land. Chevron has recently announced they will be drilling a lot of oil the coming years and I think there's quite some potential in their water business as well.

 

I know the price is ridiculous and have thought about selling, but I think it will be an amazing compounder despite the potential fluctuations in oil prices. And I don't want to interrupt the 8th wonder of the world.

[aryadhana]

For me, I think it's an amazing business. They have a lot of Drilled but Uncompleted wells (DUCs), that means there is a lot of oil that can be drilled on TPL's land. Chevron has recently announced they will be drilling a lot of oil the coming years and I think there's quite some potential in their water business as well.

 

I know the price is ridiculous and have thought about selling, but I think it will be an amazing compounder despite the potential fluctuations in oil prices. And I don't want to interrupt the 8th wonder of the world.

 

I do feel the same way.  I've been meaning to back of the envelope this.  How much is all the oil they will ever have worth- and how much does it cost to extract?  And indeed so far as I can tell the water business has had great ROIC. 

 

One thing that concerns me a bit is that they did very little in the way of buybacks last year (even later on) and recently announced that they would start.  They have a lot of extra cash, and the stock doesn't seem especially liquid.  What are the new compensation incentives?  Because the stock is lightly traded and not so followed, and they have so much cash, I think they could meaningfully push the price for some time before various longer term investors decide to put in the time to see whether they should sell. 

[aryadhana]

A chart over the last two months.

 

[Gregmal]

This is probably one of the best examples of that old trading rule about how if you want to sell, wait until the day it doesnt make a new 52 week high, comes in handy. Where it stops? Who knows. But regardless, the day it doesnt make a new 52 week high will undoubtedly still produce a better sale price than if someone simply pulled out their approximate Excel sheet derived NAV or PE multiple...Been a hell of a ride.

[formthirteen]

This is probably one of the best examples of that old trading rule about how if you want to sell, wait until the day it doesnt make a new 52 week high, comes in handy. Where it stops? Who knows. But regardless, the day it doesnt make a new 52 week high will undoubtedly still produce a better sale price than if someone simply pulled out their approximate Excel sheet derived NAV or PE multiple...Been a hell of a ride.

 

Right now, speaking about myself, TPL is a good example of the trading rule of not diworsifying and buying a basket of similar stocks as I did with BSM, DMLP, and TPL.

 

TPL's 10-year chart looks like a classic bubble. Is this the GME equivalent for value investors? I thought we were on the moon when the stock was at $1000. Next stop Mars? I'm still hodling, but will try to sell at the top :P

[thepupil]

This is probably one of the best examples of that old trading rule about how if you want to sell, wait until the day it doesnt make a new 52 week high, comes in handy. Where it stops? Who knows. But regardless, the day it doesnt make a new 52 week high will undoubtedly still produce a better sale price than if someone simply pulled out their approximate Excel sheet derived NAV or PE multiple...Been a hell of a ride.

 

Right now, speaking about myself, TPL is a good example of the trading rule of not diworsifying and buying a basket of similar stocks as I did with BSM, DMLP, and TPL.

 

TPL's 10-year chart looks like a classic bubble. Is this the GME equivalent for value investors? I thought we were on the moon when the stock was at $1000. Next stop Mars? I'm still hodling, but will try to sell at the top :P

 

Or worse, you could just own BSM and DMLP and not TPL (like me)

[Castanza]

This is probably one of the best examples of that old trading rule about how if you want to sell, wait until the day it doesnt make a new 52 week high, comes in handy. Where it stops? Who knows. But regardless, the day it doesnt make a new 52 week high will undoubtedly still produce a better sale price than if someone simply pulled out their approximate Excel sheet derived NAV or PE multiple...Been a hell of a ride.

 

Agreed....raising my stop loss daily with this one.

[Arski]

Some of you (Castanza and formthirteen) are only looking at the upside due to the rise in oil price, I think. But don't you think TPL could deliver huge returns over the next decade with their past decade record?

 

I know that they probable aren't going to grow as they used to do, but there's a lot of upside possible with the amount of oil in their oil fields and I expect quite some performance with their water business as well.

 

Or it's just our time horizons that differ.

[Gregmal]

Thats probably true but often times you want to be picking the lowest hanging fruit and with time being money, no one wants to hang around for the next half decade waiting for that last 20% or whatever. A $15B valuation on this is not crazy, but its also not cheap. The C conversation was viewed as a catalyst. This is the move.

 

Ive kind of reverse exchanged this into MSB(another HK position). Another dynamite inflation protected royalty asset. Once TPL fails to catch another high I'm out.

[Castanza]

Some of you (Castanza and formthirteen) are only looking at the upside due to the rise in oil price, I think. But don't you think TPL could deliver huge returns over the next decade with their past decade record?

 

I know that they probable aren't going to grow as they used to do, but there's a lot of upside possible with the amount of oil in their oil fields and I expect quite some performance with their water business as well.

 

Or it's just our time horizons that differ.

 

I think our price vs timeframes differ. TPL is a long term hold for me. But I have no hesitation trimming a position with these crazy run ups. I think their assets have real longterm value. Also some time is needed to see how the new corporate structure pans out.

[Arski]

Thats probably true but often times you want to be picking the lowest hanging fruit and with time being money, no one wants to hang around for the next half decade waiting for that last 20% or whatever. A $15B valuation on this is not crazy, but its also not cheap. The C conversation was viewed as a catalyst. This is the move.

 

Ive kind of reverse exchanged this into MSB(another HK position). Another dynamite inflation protected royalty asset. Once TPL fails to catch another high I'm out.

 

You have got some great points there. I forgot to mention inflation indeed. High inflation is inevitable over the coming decade (unless the governments are implementing a new currency).

 

MSB looks interesting. I'm also interested in Anglo Pacific but haven't done a lot of efforts to understand their future.

[aryadhana]

Yeah I increased my position in this a bit when it hit 800 the last time and have been scared to do anything at all about it since.  But I plan to study this a little more: how to value this thing?  I also want to figure out why the trading in this looks so weird.  The spreads are big, there's never any trading outside market hours (you usually see ridiculous spreads - much more so than other securities that are only very lightly traded outside regular hours, and those tend to be much smaller).  And it can't really be because the stock price itself is so high either since it was just as true throughout last year, and plenty of things are this expensive or more.  (Granted maybe similarly expensive shares tend to have a much higher market cap?)  Also there are no listed options, what is with that?

 

One thing that worries me is that a lot of what we're seeing is a result of poorly motivated share repurchases.  The company didn't do any last year and did recently say they would start again; and they have a ton of cash and not much use for it.  How is the management team and the new Board compensated?  Is there something like a share price target?  The company has so much cash, is sufficiently underfollowed, and traded illiquidly enough that management could presumably just throw cash towards performance targets to everyone's eventual detriment.  (And I mean through direct supply & demand metrics, not like chasing EPS growth or something as it might be elsewhere).  True: they can only get away with something like that once - but could that be where the incentives lead?

 

$1653 now and yet another ATH. 

[Arski]

I think Horizon Kinetics is a huge contributor to the run-up in price. They recently started some kind of anti-inflation fund.

 

They started buying shortly after the stock market dip and haven't stopped buying ever since.

 

And indeed, management is terrible.

[Sunrider]

... suggest you start by looking at their investor relations site, and you can also google to get background and path to this point. Horizon Kinetics also mentions them frequently in their publications.

[elevensecsrt4]

Yes there is a lot that has happened recently, many moving parts ....a google of HK on TPL will show he has been a believer a long time....Tplblog.com is a nice research starting point.