This proposal appears specifically designed to fit into the guidelines of major proxy advisory firms, which normally recommend a “For” vote on a stock split and share issuance authorizations if it results in the company having twice the number of shares outstanding after the split. Management and the current Board undoubtedly are hoping that this proposal will slip through with ETF and Index funds following normal procedures on “routine” items. But, given the long history of TPL, this “blank check” authorization for management and the current Board to dramatically change the business strategy of TPL is anything but “routine.”
If item 4 is approved, management and the current Board will have twenty three million shares, each one worth today $668 (post split) at their disposal to spend on buying up assets, subject only to stockholder approval if, under NYSE rules, a future share issuance exceeds 20% of the shares outstanding. This is far from being business as usual. It’s scary. The advantages of a stock split are minimal in comparison with the dangers of allowing management and the current Board to dramatically change the business strategy of TPL without effective stockholder input.
9 thoughts on “Lion Roars”
Glad to see a significant shareholder share these valuable comments that are right on point.
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Perhaps a pre meeting with Leadership should involve a clarification of the risk/reward of the currently proposed authority to shareholders witha re-vote at a subsequent vote to the currently scheduled vote.
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Call and ask. They will likely tell you get lost!
I agree. This Board majority has NEVER fulfilled their fiduciary duty to the shareholders. Their greed has shaken me to the core and if it wasn’t for the value of the piece of this Earth TPL owns, I’d be long gone with them at the helm. We need to release Stahl & Oliver from their agreement to vote wit the Board, get rid of Barry & Norris, then the rest of the other members along with mental midget running the company. Look at how many Vice presidents they now have. Why do they need 2 General Counsels?
They keep building up the expense side to the detriment of the shareholders’ return.
NO on 4 and the directors except Oliver.
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This letter hit the nail on it’s head. Are there any other significant shareholders out there that would like to write an open letter? The board needs to hear from all of us! What they are doing is completely egregious.
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Anybody know how much this fund owns?
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Thank God people are stepping up here.
Recommendations for Voting your TPL Proxy, Supporting Rationale and the items to be voted on
— Santa Monica Partners, LP —
Founded in 1982 and now in its 41st year, is a long-term investment partnership whose trademark is Stocks Overlooked or Ignored by Otherwise Intelligent Investors® https://www.smplp.com/
Dear Fellow TPL Shareholder:
TPL Shareholders have an opportunity to vote on a slew of very important matters so the two ex-trustees and their vastly overpaid acolyte CEO Tyler Glover and their six appointee Professional directors don’t prevail in their attempts to do things not to increase shareholder but hold it down. The two largest shareholders who control about 25% may have their hands tied, being required to vote as the board requires and institutional holders may not be thinking enough to fully appreciate what should and should not be done that will only restrict and dilute our shareholder value. So it is very important for us to vote, vote properly and spread the word and make the case to institutions and ISS.
Each of the five shareholder proposals are beneficial and aligned with increasing our shareholder value and should be voted FOR. With but one exception the Board’s proposals should be voted NO.
There is absolutely no need or reason for the board to authorize more shares so to give away even more of our equity to directors (ten of them; two who are the major owners of our company, five who are professional directors only aboard for the money, approximately $250,000 compensation they are paid each year, plus stock options, plus the ability to take some of their cash pay in stock and the three former TPL colleagues, Tyler Glover who ran the daily operations such as they are for many $millions less than he is being paid today and the Co-Chairmen who are the two former trustees who for years very willingly served as trustees of the TPL Trust for annual pay of $104,000) or to employees who number far, far more than the royalty business requires and therefore no reason to issue all the stock.
Furthermore, the cyclical, capital-and labor-intensive water business should be spun off to create more value. (1) One and one is not going to equal less than two and likely will add up to much more. One reason the so-called management is resisting this is they are hiding the fact that produced waters may well be unprofitable – you notice while the P&L reports revenues from both Produced and Sourced water separately it reports to shareholders only their combined costs. You do understand why they do this. BTW when the water business is spun off some TPL directors can be named to the water company board.
It is clear the two ex-trustees now Board Chairmen and Board member CE0 Tyler would love to dilute the shareholdings of Director Murray Stahl and his firm’s clients and employees and Director Eric Oliver which appear to be about 25% of the outstanding share count today. The Board mentions splitting the shares 3-for-1 leaving the other half of their sixfold plan they want desperately to authorize, to make acquisitions and benefit themselves. Before this plan of theirs to split the stock.
On a normalized basis, the former TPL Trust generally used 60% – 70% of cash flow to repurchase shares, while the remainder was deployed towards dividends and a modest amount of capital expenditures. TPL should resume doing this. There is no need to lower the unit (share) price to attract speculators, gamblers, traders and uninformed people to our company and our stock. The TPL C corp should therefore NOT split is stock nor should it use its shares to purchase anything other than its own shares! (2)
Indeed there is no need to attract the kind of shareholders that a much lower share price by virtue of a big split would attract. There is no sense in creating more competition to compete with TPL to repurchase its own shares. If you read the TPL blog you can see shareholders are all long-term investors and understand both the company very well and the board very well.
A $2000+ TPL stock price which we sure as hell all believe in the fullness of time can attain another digit does not gain anything from a 3-for-1 split. In fact you can be positive that shareholder Warren Buffet is not going to favor splitting the stock of TPL. How do I know? I asked him and he reminded me he has shares never split and he never really favored creating the B shares. TPL to date has no issues even remotely comparable to Warren’s reason (1) for creating the lower unit priced B shares. Please think about this.
Furthermore, the cyclical, capital intensive and labor heavy water business should be spun off to create more value. (One reason the so-called management is resisting this is they are hiding the fact that produced waters may well be unprofitable – you notice while the P&L reports revenues from both Produced and Sourced water separately it reports to shareholders only their combined costs. You do understand why they do this. When the water business is spun off some TPL directors can be named to the water company board.
TPL’s capital should be used for acquiring shares through open market purchases as the new corporation should have been doing a lot more of once it was incorporated and free to do. The company could conduct Dutch auctions and use other means of buying in shares in private transactions. TPL should be shrinking shares outstanding not increasing them and of course should apply much more of its cash hoard and cash flow to stock repurchases. TPL has no need to buy anything other than a great investment, itself!
THE PROXY: https://www.sec.gov/Archives/edgar/data/1811074/000110465922106945/tm2227513d2_defa14a.htm
VOTE TO INCREASE THE PROFITABILITY AND VALUE OF TPL BY VOTING:
PLEASE VOTE AGAINST 1a, 1b, 1c, 2 & 4
VOTE FOR 3, 6, 7, 8, 9, & 10
Have questions, feel free to call me 914-833-0875 or email me email@example.com
(1) BTW, TPL has already done enough stock splits. They have done three and should not do anymore.
AS MENTIONED ABOVEWHAT TPL SHOULD DO IS SPIN OF ITS WATER BUSINES, AVOID AN ILLEGAL INTERLOCKING BOARD BUT HAVE SOME OF TPL DIRECTORS, IDEALLY STAHL AND OLIVER, BECOME DIRECTORS OF A SEPARATE TPL WATER COMPANY. A SPIN OFF WOULD ENABLE RESTORATATION OF THE HISTORIC TPL ROYALTY BUSINESS TO HAVE A NEAR 95% GROSS OPERATING PROFIT MARGIN % ONCE AGAIN AND ONE TPL SHARE AND ONE WATER COMPANY SHARE WILL VERY LIKELY EQUAL MORE THAN TWO IN MY CONSIDERED OPINION FOR MANY GOOD AND SUFFICIENT REASONS
TPL when a trust has undergone stock splits which have multiplied 100 original shares tenfold (which is why Warren owns 3000 shares). The TGPL Corporation does not need any more spits.(i)
TPL Split History
Jul. 13, 2007 5:1
Mar. 13, 1980 3:1
Jul. 01, 1975 2:1
(i) Why Warren Buffett Decided to Launch Berkshire’s B Shares
January 13, 2020
Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) has two different share classes: the A Shares, which are worth over $300,000 apiece, and the B Shares, which are worth around $240 apiece as of the writing of this article.
Warren Buffett decided to add B Shares to Berkshire’s capital structure in the mid-90s. His growing popularity had ignited a burgeoning demand for Berkshire stock, and to satisfy this demand, the board decided to offer another share class to the public.
This decision wasn’t driven by a desire to increase access to other investors who could not afford to buy the group’s A Shares. If Buffett wanted to do that, he could have just split the shares, which he has said on multiple occasions that he does not want to do because the higher share price attracts a different class of shareholders and makes it harder for day traders to game the group’s stock price.
Instead, Buffett set out to create the B Share class to discourage abuse of Berkshire’s stock price by mutual funds set up specifically to buy shares in the conglomerate.
Berkshire’s new share class
The Oracle of Omaha explained why he was setting up the new share class at the 1996 Berkshire Hathaway annual meeting of investors:
“Over the years, we’ve had probably half a dozen people, one time or another, propose that the creation of an all-Berkshire investment company or unit trust. In other words, an entity that would hold nothing but Berkshire stock, and then would parcel out its own shares in smaller denomination pieces to the public. And we have generally discouraged that because we felt that there was considerable potential for abuse in such an arrangement.”
Buffett explained that in the previous year, several unit trusts of this type had submitted documents for approval to the SEC. These investment vehicles would have offered exposure to Berkshire, but Buffett believed that they would come with substantial risks for investors: “Holders of those trusts would’ve bought into an entity that had a defined life, but that had considerable, in the way of costs and some tax consequences, that they might not anticipate when they came in.”
In truth a great many people would end up buying these unit trust holdings without any idea, really, of what they were buying, and with unrealistic expectations as to the future. And that “that” would, in turn, create a considerable demand — because these unit trusts would go out and buy Berkshire shares — that would create a considerable demand against a fixed supply, much of which is almost unavailable because people have a low tax basis and are reluctant to sell, and I hope they’re reluctant to sell for other reasons.
And that the very action of the creation of these, and that push on the demand, would — might very well create some speculative spurt in the stock, which in turn, would induce people who had been approached about the trust to feel they were missing even more of a good thing by rushing in.”
In other words, Buffett believed that if these unit trusts were allowed to go ahead, it would create a bubble in Berkshire stock. Also, it would create an environment for unscrupulous Wall Street managers to charge investors excess fees and commissions to piggyback on Buffett’s success. The subsequent bubble and then collapse would have been horrible publicity for Berkshire and Buffett.
To help counter these issues, Buffett launched the B Shares. He offered “as many shares as people wanted to buy,” to satisfy all of the demand, and set a commission that was about “as low as any I’ve ever seen in many years on Wall Street,” with the hopes of attracting high-quality investors who wanted to stay with the business forever.
WE DON’T NEED TPL TO SPLIT TPL STOCK TO EXPOSE US TO ANY CHANCE OF A STOCK PRICE BUBBLE IN ORDER TO ALLOW “attracting low-quality gamblers and speculators in place of investors who do not want to stay with the business but merely want a more tradeable digit stock unit price. There is no reason to slice our delicious pie into more slices!. And anyway we all know the real reason the two Chairmen and acolyte CEO want to authorize 6x more shares and it ain’t just to do a 3-for 1stock spit.
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Who is going to Dallas on November 16th? We need to make sure our voices are heard. This will be the first in person meeting in years. The Board thinks they can do whatever they want without any fallout. I will be there and I hope if you are reading this you will join me as well!
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