Activist?

tpltblogger3 Comments

Bloomberg: Hedge Fund Challenges $6 Billion Texas Land Bank in Activist Play

Not sure I’d qualify a party that 1) has a 20yr+ history with a stock and 2) controls ~25% of the float as an “activist”.  Term seems too strong.  The rest of the article linked above is a good recap of what we’ve seen play out in recent SEC filings.

Horizon Kinetics LLC, which owns a 23 percent stake, has urged the trust to modernize its structure and appoint Eric L. Oliver after the previous trustee stepped down due to ill health. Texas Pacific said March 4 that its trustees nominated Preston Young for the position.

Chief Executive Officer Tyler Glover, in an email Monday, defended the company, pointing to a more than 40 percent increase in its stock price in the last year. He called it an “impressive market performance” he credited to “active management of our expansive asset base and other steps taken to position the Trust for continued growth.”

In its filing, Horizon Kinetics wrote that it wants to make Texas Pacific a Delaware corporation “subject to modern governance principles” and better develop a division that supplies the oil fields with water, it said.

Oliver, Horizon’s choice as a trustee, is one of the shareholders who signed the cooperation agreement through his SoftVest Advisors LLC, as is financier Allan R. Tessler, who owns stock through several entities. Horizon also wants management to provide more information to shareholders such as drilling updates, water production and engineering reports.

The fund “believes that the Trust should be more transparent and frequent on its updates to holders of securities,” it said in the filing. A Horizon spokesman declined to comment beyond the filing.

3 thoughts on “Activist?”

  1. TPL hasn’t exactly been doing badly. Stock bounced right back from pre-Xmas price plunge, and last ER had lots of revenue increases with more to come as water biz grows and DUCs get completed. So it’s understandable TPL is pushing back on HK’s trustee play, and will probably win this round for now. Whatever the outcome, TPL management knows it is now being scrutinized at a new level, and must perform accordingly. Not a bad thing for us.

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  2. I don’t have a firm opinion yet about which Trustee candidate will prevail, but have said before that whatever is good enough for Saint Murray (Stahl) is good enough for me. No one has more vested interest in maximizing the value for TPL, which would benefit all subshare holders. Competition and questioning of the status quo is good, so it think it will be a healthy debate about the best future direction of the trust. The market seems to agree, with a big upward tick for TPL today. I just hope it doesn’t become a hostile situation. According to the article, Glover already seems to be responding to “defend the trust,” which is probably not necessary. Great results speak for themselves, but we shareholders have long questioned the governance structure and need for more transparency. Hoping for an outcome that doesn’t incite a civil war.

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  3. Agreed on Civil War comment from Jeff. Also curious to understand how the publicity of this event impacts the “under the radar” TPL.

    Comments on this board have been thoughtful and informed, thanks to all for sharing thoughts.

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