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TPL Texas Pacific Land Trust
Posted on 8/11/23 at 3:25 pm
Posted on 8/11/23 at 3:25 pm
Anyone in this one?
I found the story by accident, was intrigued and now I'm optimistic.
TPL has traded on the NYSE since 1927. It is a land trust created out of a railroad bankruptcy. The State of Texas had granted T&P Railroad 3.5 million acres of West TX land to build a railroad from Marshall TX across the state and connect to a line running to San Diego. T&P went bankrupt and the land went into a land trust to pay back the bondholders. That trust has been selling off the land for over 130 years now. It's been called the slowest "going out of business sale" in history. They've sold off more than 75% of the land, but they're still one of the largest private landowners in Texas.
It was a pretty boring stock, trading sub $10 up through the early 2000s. It started getting a little more interesting then because the land sits on top of the Permian Basin. When the share price got over $60, they did a 5 for 1 stock split, the only one in their history.
The share price hit $1917.75 today.
Which was great, but still only in the middle of it's 52 week range. The high was $2739 in November 2022.
This is an old article (2014) that tells the history more in-depth Business Insider link
I found the story by accident, was intrigued and now I'm optimistic.
TPL has traded on the NYSE since 1927. It is a land trust created out of a railroad bankruptcy. The State of Texas had granted T&P Railroad 3.5 million acres of West TX land to build a railroad from Marshall TX across the state and connect to a line running to San Diego. T&P went bankrupt and the land went into a land trust to pay back the bondholders. That trust has been selling off the land for over 130 years now. It's been called the slowest "going out of business sale" in history. They've sold off more than 75% of the land, but they're still one of the largest private landowners in Texas.
It was a pretty boring stock, trading sub $10 up through the early 2000s. It started getting a little more interesting then because the land sits on top of the Permian Basin. When the share price got over $60, they did a 5 for 1 stock split, the only one in their history.
The share price hit $1917.75 today.
Which was great, but still only in the middle of it's 52 week range. The high was $2739 in November 2022.
This is an old article (2014) that tells the history more in-depth Business Insider link
2
Posted on 8/11/23 at 3:34 pm to Lightning
Doesnt sound like a stock i would want to own longterm if they are selling off their assets which means the land. If you got in early hold but aint buying here.
Posted on 8/11/23 at 3:51 pm to FLObserver
They sell off the land (slowly) but more importantly, they own the mineral rights. That's why the revenue has spiked, from the oil and gas royalties. No debt, no real operating costs until they spun off a water company, just 800,000 acres of resource rich land.
And when they sell the land, the trust charter says they have to use those funds on share buybacks. Hence the exponential growth over the past ~20 years.
Things got squirrely the past 2 years when the trustees (who are appointed for life...) voted themselves massive salary increases and tried to issue new shares (enriching themselves but diluting shareholders). Largest shareholder balked at this and the trustees have used shareholder $$$ to sue the shareholders. That's why the share price dropped to a "low" in the $1200s.
But they just announced a "board refreshment" ie the two trustees that have been fighting to line their own pockets are resigning instead of having to wait until they die to be replaced. This looks good for future transparency, so the share price has been climbing the past 2 weeks.
And when they sell the land, the trust charter says they have to use those funds on share buybacks. Hence the exponential growth over the past ~20 years.
Things got squirrely the past 2 years when the trustees (who are appointed for life...) voted themselves massive salary increases and tried to issue new shares (enriching themselves but diluting shareholders). Largest shareholder balked at this and the trustees have used shareholder $$$ to sue the shareholders. That's why the share price dropped to a "low" in the $1200s.
But they just announced a "board refreshment" ie the two trustees that have been fighting to line their own pockets are resigning instead of having to wait until they die to be replaced. This looks good for future transparency, so the share price has been climbing the past 2 weeks.
This post was edited on 8/11/23 at 3:53 pm
Posted on 8/14/23 at 10:39 am to Lightning
I was in it for some time a few years ago but was worried about the long-term of O&G.
Bought at 260 and sold at 750 because I thought it had run up as much as it could.
Bought at 260 and sold at 750 because I thought it had run up as much as it could.
Posted on 8/14/23 at 1:15 pm to southernelite
A 3x is nothing to sneeze at but those $2k+ share prices had to sting a little.
Posted on 8/14/23 at 6:13 pm to Lightning
I’ve been researching this quite a bit since you brought it up. I’m super intrigued but the valuation is incredibly difficult to peg down.
Also, the director lawsuit you’re mentioning seems to have had minimal impacts on the stock. They were going to do a stock split with the newly authorized shares, which isn’t dilutive to current shareholders. The stock is mostly trading up and down with broader energy stocks, hence the recovery of late.
It is a bit good ol boy, which can be both a blessing and a curse, but I keep going back to valuation. An O&G shale play trading at 32x cash flow from a finite reserve amount is not necessarily cheap.
Also, the director lawsuit you’re mentioning seems to have had minimal impacts on the stock. They were going to do a stock split with the newly authorized shares, which isn’t dilutive to current shareholders. The stock is mostly trading up and down with broader energy stocks, hence the recovery of late.
It is a bit good ol boy, which can be both a blessing and a curse, but I keep going back to valuation. An O&G shale play trading at 32x cash flow from a finite reserve amount is not necessarily cheap.
Posted on 8/14/23 at 11:07 pm to slackster
Did you find TPLT Blog yet?
This guy has been writing in depth on this stock for years now, with all the trustee drama and when it finally changed from a trust to a C corp.
I have also struggled to really find an accurate valuation of the assets. My thought is that if they have to keep buying back their own shares and retiring them, the price continues to snowball.
This guy has been writing in depth on this stock for years now, with all the trustee drama and when it finally changed from a trust to a C corp.
I have also struggled to really find an accurate valuation of the assets. My thought is that if they have to keep buying back their own shares and retiring them, the price continues to snowball.
Posted on 8/14/23 at 11:12 pm to slackster
They also spun off a water resources company. With all the interest in rare earth minerals in West Texas, plus the lithium brine in East Texas, I’m curious if there are other resources in that land/water that haven’t even been tapped yet.
I know Mineral Wells in Palo Pinto County has lithium in their water. It’s where the “crazy water” legend of Mineral Wells got started and those wells are still bringing up lithium rich water today. Perhaps the Smackover stretches further west than we know?
I know Mineral Wells in Palo Pinto County has lithium in their water. It’s where the “crazy water” legend of Mineral Wells got started and those wells are still bringing up lithium rich water today. Perhaps the Smackover stretches further west than we know?
Posted on 8/14/23 at 11:34 pm to Lightning
quote:
My thought is that if they have to keep buying back their own shares and retiring them, the price continues to snowball.
Sort of. It’s very tightly held now, but a good chunk is wrapped up in a couple private firms that have been longtime investors. Most of the people involved are old, and there is no guarantee the heirs hold onto the shares. Also, their buybacks have been paltry lately, and while it helps a little, there still is a relatively finite value of the company long term. They bought back over 325k shares in 2011 on revenue of $35 million. In 2022 they bought back less than 50,000 shares on $562 million of operating income. It can’t really cut costs, invent something, etc to grow into a valuation. I’m sure there is an appropriate price to pay for it, I’m just not sure what it is. I’ll continue to follow it though.
Posted on 11/22/24 at 11:51 am to slackster
TPL is up 12% today on new that it is replacing Marathon Oil in the S&P 500.
They did a 3 for 1 stock split in March and it's 3xed since then. Up over 200% for the year.
Definitely feels like some irrational exuberance at this point but I'm not sure what the rational price would be right now either.
They did a 3 for 1 stock split in March and it's 3xed since then. Up over 200% for the year.
Definitely feels like some irrational exuberance at this point but I'm not sure what the rational price would be right now either.
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