Author Topic: TPL - Texas Pacific Land Trust  (Read 39503 times)

NoCalledStrikes

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Re: TPL - Texas Pacific Land Trust
« Reply #10 on: January 09, 2015, 12:34:56 PM »
thepupil  +1

1. It is essential to break out the barren $100/acre land with the potentially high value land. 
2. I would also then suggest breaking out the 1/16 royalty land from the 1/64 royalty land as everything else being equal, the 1/16 land is worth 4 times more than the 1/64. 



Picasso

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Re: TPL - Texas Pacific Land Trust
« Reply #11 on: January 09, 2015, 01:27:31 PM »
I remember looking to short this around $170 and just never pulled the trigger.  I just don't see how investors who purchased this at $240 are going to get any reasonable kind of return. 

You probably need to assign almost no value to the land given it is not liquid at all and the opportunity costs of sitting and waiting are massive.  Even if you get the stock trading at a discount to the asset values the returns are limited to the reduction in share count. 

This is the kind of stock I would buy at 50% under NPV which in this case might be around $750mm implying a buy price of around $40.  That also happens to be the average price of the stock in 2011/2012 when one could argue the future looked a lot brighter. 

I personally don't see the appeal.

thepupil

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Re: TPL - Texas Pacific Land Trust
« Reply #12 on: January 09, 2015, 01:36:18 PM »
the appeal is you have royalties and pipeline easements that seem to perpetually surprise to the upside. And you own a greater % of those each year. But the problem with that is as the stock goes up and up then the share count reduction becomes less potent and at some point becomes value destructive.

I'd probably be a buyer if it went down another 40%, but that's true of a whole lot of stocks and the cult of Stahl probably won't let that happen.

Picasso

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Re: TPL - Texas Pacific Land Trust
« Reply #13 on: January 09, 2015, 01:50:42 PM »
the appeal is you have royalties and pipeline easements that seem to perpetually surprise to the upside. And you own a greater % of those each year. But the problem with that is as the stock goes up and up then the share count reduction becomes less potent and at some point becomes value destructive.

I'd probably be a buyer if it went down another 40%, but that's true of a whole lot of stocks and the cult of Stahl probably won't let that happen.

Isn't that appeal the equivalent of buying some good total-return bond fund (maybe Gundlach) and reinvesting the dividends?  Or buying some Oaktree convertible bond fund and reinvesting the dividends.

The total return on TPL from 1980 to 2012 was about 6% a year.  This stock goes through very long stretches of almost no movement and buying it after it's jumped up 3-4x in a few years seems to bet strongly against previous history. 

It will be interesting to continue watching.

thepupil

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Re: TPL - Texas Pacific Land Trust
« Reply #14 on: January 09, 2015, 02:50:35 PM »
and it's a 45 bagger since 1978 (EDIT: which is actually only an 11% CAGR!). entry point is obviously important. we agree that it's expensive.
« Last Edit: January 09, 2015, 03:02:17 PM by thepupil »

thepupil

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Re: TPL - Texas Pacific Land Trust
« Reply #15 on: January 09, 2015, 03:17:24 PM »
http://www.horizonkinetics.com/docs/TexasPacificLandTrust%20TPL%20CRRMay95.pdf

It's instructive to read the original report at a MCAP of $63MM. Shares have been basically halved while net income multiplied 10 fold.

Clearly the original thesis was correct. I don't think a bond fund can do that. The oil linked royalty on diverse acreage with even more oil than expected + the right to run pipelines through that land was a lot more valuable than anyone expected.

But going forward I wouldn't want to count on similar growth.

ValueMaven

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Re: TPL - Texas Pacific Land Trust
« Reply #16 on: December 11, 2016, 11:00:10 AM »

I would like to reopen this idea…Apache recently announced a significant new finding in the Southern Delaware Basin, of which TPL holds substantial interests in the region.   As Apache builds out across the region, TPL will effectively charge a small, very, very small fee for all sorts of services in which Apache needs for E&P development in the region.  This could take 10, 20 or even 30 years to playout at this point. 

Access to pipelines: you MUST pay TPL, access to water rights for fracking extraction: you MUST pay TPL, Access to road creation: you MUST pay TPL, To drill: You Must pay TPL…and the thesis goes on and on. 

So, effectively, how do you value a company which has no meaningful operations, no debt, 4 employees, basically cashes checks, and is mandated simply to buyback stock and pay a modest dividend???  TPL has retired approximately 92 million shares since 1888 and given this new finding, one could argue the rate of return could be material from here.  A parabolic rate of return at this point? 

I have no position in the stock – the name is highly, illiquidity, only trading about $10mm dollars worth of stock everyday.

Apache PR:  http://investor.apachecorp.com/releasedetail.cfm?ReleaseID=988060
« Last Edit: December 11, 2016, 11:03:07 AM by ValueMaven »

muscleman

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Re: TPL - Texas Pacific Land Trust
« Reply #17 on: December 11, 2016, 02:11:38 PM »
Does anyone think Horizon's trading activity is a bit strange?
https://www.sec.gov/Archives/edgar/data/97517/000151941816000030/sched13da.htm

They continued to buy and sell every day, and they buy at a slightly higher price than they sell.  :o
I am muslceman. I have more muscle than brain!

ValueMaven

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Re: TPL - Texas Pacific Land Trust
« Reply #18 on: January 16, 2017, 08:39:26 AM »
This is one of the most challenging and interesting securities to value.  I was informed that Jefferies is in the market bidding for a meaningful portion of stock…possible for an Activist looking to break TPL up into an MLP/REIT.  You could also see a reverse split to improve trading liquidity…which TPL did once before in 2007 I believe.  Of course the rise in the stock price is actually BAD, as the company acquires less and less shares through its pre-mandated buyback program.  This name isn’t for the faint of heart however, as the fundamentals are very unclear at this point.  I’ve heard bull cases for the name to go up 10X over the next 20years, as well as the bear-case.  It’s worth keeping an eye on the name if the market ever seriously corrects, and TPL falls 30% - 50% to start acquiring.  I have no position in TPL but find it a interesting self-liquidating land trust. 

Question to the board – what other self-liquidating companies are you following?

ValueMaven

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Re: TPL - Texas Pacific Land Trust
« Reply #19 on: February 02, 2017, 07:07:52 PM »
http://www.horizonkinetics.com/docs/Q4%202016%20Commentary_Final.pdf

The most complex STOCK (notice how I did not use BUSINESS, as TPL is effectively dirt and rocks) to analyze was recently mentioned during HK's 4th Quarter investor letter....HK owns around ~25% of this STOCK's outstanding market-cap...

Who knows...I am avoiding this right now - but find the STORY fascinating