Playing the Long Game

No debt.

~$180MM cash on hand (my estimate).  Good enough to take down 7.6% of the $2.35B mkt cap.

Sure, it’s a falling knife but it’s my falling knife.

13 thoughts on “Playing the Long Game

  1. The oil patch is definitely in a world of hurt. It would be a tough decision to blow all the cash on buybacks if this was “a regular company.” However, it’s by design supposed to be buying back shares with all extra cash. There is some small amount of capital required to run the trust — higher amount now with the water business — but mostly it would be a ‘burn the cash’ moment.

    There is no market for TPL options; it would be interesting in this crazy market to have the company write put options on the stock, creating a floor, and add the resulting premium cash to the books.

    When will TPL be out of the “no buybacks can happen because of reason X” window? How will we know they started again other than reporting months later?

    Liked by 1 person

      • The trust needs to do what it is supposed to do. Return capital to the subshare holders through either/both dividends/subshare purchase. The trust is supposed to be ‘going out of business.’ Its a travesty but hell, damn it, that land/royalties are worth a fortune. Who knew we were going to be dealing with two black swans of a pandemic and an oil war at the same time? I’m going to pick some more up and wait. wait. wait. wait….

        Liked by 1 person

        • Could be that Barry and Norris will go down in history as the guys that killed it. Sad part is they own 100 shares each. Pure hubris. They get to carry that with them wherever they go. Not too late to make it right though.


  2. Its a buying opportunity and I also took advantage of it recently. Not at the recent lows, but am still happy to have more. My knife wounds on the hand will heal.

    Oil is off 62% since January. Or the same price as 19 years ago when we were in the crash fallout. This is a big deal if you are an exploratory company with a lot of debt. Or even moderate debt. There will be business failures.

    As they say in commodities, “What cures low prices is low prices.” The weak companies die, capacity that is no longer economic dries up, and those with reasonable debt and margins become more efficient and right sized. All this will pull oil prices higher.

    What isn”t known is how long the corona virus will squeeze energy demand, and oil is mostly a transportation fuel. It will eventually end and demand will recover,

    In these uncertain times, having a hard asset like TPL with no debt, and a very high net profit margin seems a good place to hide. They can’t print land in Washington DC. And if some companies disappear that are giving TPL royalties today, thats ok short-run. This also helps balance supply to demand, and can be sold for higher in the future.

    Liked by 2 people

Comments are closed.