Investor Letter (En Español)

Jean Philippe Tissot via MOI Global

Pull the link up in Google Chrome and click translate if you too failed first semester Spanish in undergrad.

Some highlights:

TPL royalties have an approximate weighted average value of 5%, which is considerably lower than the standard paid in the Permian; This is a powerful incentive for producers to continue increasing production on TPL lands.

Another obstacle for investors who are comfortable with TPL is the near impossibility of assigning a value and anchoring it. TPL is an example of how optionality plays an important role. If I had to value TPL in the past, I would have assigned zero to the water business. I would not even have known.

In last year’s letter, I explained that I was looking for convex situations. These are situations in which, when the facts appear and are positive, they have a greater effect than when they are negative; TPL perfectly fulfills that attribute.


2 thoughts on “Investor Letter (En Español)

  1. Thanks for the link. I also liked the following comment from his analysis:

    “The opportunity exists because TPL is not covered by any analyst; The vast majority of automated investment reports show its a short run situation; and because our human biology is more interested in complex and stimulating situations.”

    Liked by 1 person

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