Lion Writes Again

I missed this yesterday. Walker nails it. Trust should be built. #4 is not routine. #4 should have been in done in two parts. If this isn’t an attempt to steal power from existing shareholders (it is), it is a tone deaf at best. Ill-intentioned or ignorant? Neither are good.

Why is the use of stock as a currency in acquiring assets such a hot button topic?

Because it goes to the very heart of the issue of the alignment of interest between stockholders and a company’s management and board of directors. In many Berkshire Hathaway annual letters investment legend Warren Buffett has addressed this topic. Having stock to issue is not simply “just another tool in the toolbox”. Here is an extract from Mr. Buffett’s 1994 Berkshire letter to stockholders:

“The sad fact is that most major acquisitions display an egregious imbalance:  They are a bonanza for the shareholders of the acquiree; they increase the income and status of the acquirer’s management; and they are a honey pot for the investment bankers and other professionals on both sides. But, alas, they usually reduce the wealth of the acquirer’s shareholders, often to a substantial extent.  That happens because the acquirer typically gives up more intrinsic value than it receives.  Do that enough, says John Medlin, the retired head of Wachovia Corp., and “you are running a chain letter in reverse.”

Over time, the skill with which a company’s managers allocate capital has an enormous impact on the enterprise’s value.  Almost by definition, a really good business generates far more money (at least after its early years) than it can use internally.  The company could, of course, distribute the money to shareholders by way of dividends or share repurchases.  But often the CEO asks a strategic planning staff, consultants or investment bankers whether an acquisition or two might make sense.  That’s like asking your interior decorator whether you need a $50,000 rug.”


The Board of Directors of TPL has a fiduciary responsibility to stockholders to safe-guard a truly unique asset. For over 125 years TPL has single-mindedly followed a simple business model that has created tremendous, index-beating returns for its owners. Now just 23 months after converting to a Delaware C corp. the Board and management would have TPL’s stockholders indirectly agree to a dramatic change in TPL’s business plan, without informed stockholder input, claiming it to be a “routine” decision. It is not.

For these reasons, I shall continue to urge the Stockholders of TPL to vote Against Proposal 4.


/s/ Stephen N. Walker

Stephen N. Walker
General Partner 
Lion Long Term Partners LP

10 thoughts on “Lion Writes Again

  1. The timing is interesting here. Stephen Walker from Lion details his conversation with CEO Glover and CFO Steddum that took place on Nov. 4, then publishes his letter on Nov. 7 continuing to build the case for voting against the proposal (with some incredibly pertinent wisdom from Warren Buffet). TPL releases their letter to shareholder on Nov. 8 in a desperate, pathetic attempt to justify the proposal.

    Liked by 1 person

  2. Really appreciate Stephen Walker / Lion Capital sharing this additional information and keeping the debate going.

    Re-reading the material from TPL management today, I am very puzzled by this statement.

    In its report dated November 1, 2022, Glass Lewis stated, “The Company currently does not currently have sufficient shares available for issuance to meet its existing obligations. We are concerned that the Company is unable to meet its current and potential obligations and believe it is important that the Company obtain additional common shares available for issuance in the future.”

    What existing obligations have they already made where they don’t have sufficient shares or capital? Is there some deal underway right now that depends on #4 getting a majority vote. It sure sounds like there is!

    As of September 22, 2022, the Company had 45,224 shares of treasury stock, with a value of $120 million right now. They have nearly half a billion in cash, with more rolling in daily. They have no debt and clearly don’t need it.

    What possible reason would Glass Lewis have for saying this unless a major deal was in the works?

    Which might also explain the “fourth and long” strategy of TPL management to put out a desperate attempt to swing votes their way. They get the daily tallies on how the vote is going, and realize its going to have complications for what they are up to if they don’t get their way.

    All the years of these sneaky deals….and management (old trustees and Glover) wonder why we don’t trust them. This is just another attempt to overthrow what the shareholders want.

    Liked by 1 person

    • Here was the reply from IR:
      Hi Ryan – yea, it’s awkwardly worded from Glass Lewis. The Company has no debt nor does it have any hidden liabilities, hedge exposures, or any other “obligations” beyond just normal-course operating expenses. The intent behind including the Glass Lewis statement in the letter was to provide their commentary verbatim rather than take any editorial liberty. As you noted, the company has plenty of free cash flow and liquidity to run the company, and then some.

      Thought it might be helpful to include a screenshot of the pertinent part of the Glass Lewis report below:

      This was a screen shot of the statements. The statement in question as well as one addressing anti-takeover use.

      Liked by 1 person

      • So…….Glass Lewis actually said what they did, but its far from being factual. Awkwardly written….what a laugh. It’s absolutely wrong.

        And TPL IR knows that, but management still put that in the letter asking for our vote to approve #4. Really feels like TPL management wanted to “spin” the not factual statements on liquidity and treasury stock for their benefit in getting votes.

        Just another example in why I don’t trust the people signing that letter.

        Liked by 1 person

      • I received the same verbatim response from TPL’s IR when I inquired about the Glass Lewis wording about “obligations.” The comment below from Glass Stegal about Anti-Takeover Use is also awkwardly worded, but I think it is saying it should be seen as a negative by shareholders that the board could use authorized shares to thwart a takeover attempt. Of course, the Axis of Evil (Norris, Barry, Glover) neglected to include that part in yesterday’s communication to shareholders because it didn’t fit their narrative.

        Anti-Takeover Use
        One significant concern that we believe public shareholders should have about increases to authorized common stock relates to the ability of the board to use authorized but unissued stock to make effective certain takeover defenses. In this case, the board states that it currently has no intention to use the requested shares for any anti-takeover measures.

        Liked by 1 person

  3. All: Walker is directly on point. If the proxy advisors did their research they would understand the deep dissatisfaction and mistrust that many large and longterm investors in TPL have with the board of directors, particularly the co-chairs. The final votes on the resolutions before stockholders at the upcoming annual meeting will in most cases reflect this dissatisfaction and mistrust rather than whatever fundamentals may be ascribed to the resolutions presented.

    Liked by 1 person

  4. There should NOT be any current obligations. They have not disclosed any which could constitute fraud if they knowingly have made a deal that depends on #4 passing without telling the shareholders and which could influence our votes.

    The fact that only the former trustees and Glover signed the revised 14A is very worrisome and is a red flag to me that there’s something rotten going on.

    Liked by 1 person

  5. Doesn’t the vote likely go where MS/HK (and lesser extent EO/Sv) come down? It seems doubtful that if they go ‘Yes’, that we (the No team) would win 50 of the remaining 70ish %. If MS/HK goes ‘No’, then it seems unlikely that Barry, Norris and Gover can save #4 any more than they could Dana (given how rare it is to vote out a board member).

    It feels like to me that MS is essentially Manchin in the Senate. MS has to be smarter than little joe.


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