Okay, Terrific

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Derrick Whitfield, Analyst:

Perhaps one last if I could, just with respect to your trial versus Horizon Kinetics, what should we expect from the post-trial briefing schedule, meaning, I’m not asking you to project it outcome, but does a favorable outcome allow you to advance proposal for assuming you have a shareholder approval?

Tyler Glover, President and Chief Executive Officer:

Say the last part of that question one more time, Derrick. Sorry.

Derrick Whitfield, Analyst:

Sure. So with respect to the decision that comes out of the post-trial briefing schedule with Horizon Kinetics, what should we expect from that. And by that, I mean I’m not asking you to project an outcome of the trial, but does a favorable outcome allow you to advance proposal for, assuming you have shareholder approval?

Tyler Glover, President and Chief Executive Officer:

Yes, that’s correct.

Derrick Whitfield, Analyst:

Okay, terrific. That’s all from me, guys. Thanks.

Operator:

Thank you. The next question comes from Hamed Khorsand from BWS Financial. Please proceed with your question, Hamed.

Hamed Khorsand, Analyst:

Good morning. The first question I had was on just the legal expense line, is that an accrued expense? What should we expect in Q2? And is that a normal number, I mean it seems quite excessive?

Chris Steddum, Chief Financial Officer:

Hey Hamed, that is an accrued expense. And, look, we really can’t comment on expectations of what the spend maybe in the future. And so that’s kind of where it’s at right now.

Hamed gets it…

45 thoughts on “Okay, Terrific”

  1. Not surprising, but what was most annoying is that the conference call lasted all of 16 minutes and included only 2 questions. I’d bet there were others waiting that were conveniently ignored. At least the issue of the legal expense line was called out by one of the questions, but management could conveniently sidestep it and not give a meaningful answer.

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  2. These asshole management will go to hell

    I know HK will prevail and TPL will return to its glory days, just that going through it is a painful experience

    Liked by 1 person

  3. hot take: there has to be a savvy financial advisor out there that can tax efficiently get low basis investors out of this thing so ya’ll can move on with your lives

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  4. Win, loose or draw, when all this legal maneuvering is over, the same POS’s will be in charge. I hole everyone is tickled as peach punch with the new Delaware Corporate structure. Went from some old guys signing the checks to this nonsense. All I hope for is the corporate jet making a hole in the ground somewhere with all corporate mangement on it. Or they all get in a Denali and hit a bridge support.

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    • HK is a fiduciary. #1 priority is looking out for the best interest of your shareholders. If you were Stahl and had come to the realization that you entrusted the bulk of your shareholders hard-earned capital including a significant percentage of your own personal wealth to a clique of grifters, scoundrels, interlopers, and corporate terrorists that were actively conspiring to royally screw you over, what would you do?

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      • Yes, 100%.

        When I say it’s concerning I mean it is concerning if they have come to the conclusion that they can’t win this and that the business is impaired and need to get out.

        If HK is throwing in the towel what makes me think I have any superior insights to stay in.

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        • It’s possible the massive share price decline is in due in part to HK slowly stealthily liquidating their TPL (down another -2.34% today) position. Who could blame them, right? They have high conviction in big O&G royalties so I could see them redeploying capital to PBT (up 2.8% today) and PSK (up .98% today).

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    • HK could very well likely be forced into selling their position due to client redemptions.

      HK funds are getting crushed because of their TPL concentration. Why pay the fee to HK on top of dealing with this trash management team at TPL? I’d pull my money out.

      I don’t know why you’d pay anything to HK anyway when you can just mimic their portfolio easily.

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    • Murray Stahl has continued to accumulate daily, RENN Fund (RCG) which is roughly (30%) total Fund asset value so it is basically an indirect TPL purchase. Prior to Feb. 13th, 2022 filing Murray was acquiring each and every day shares in both TPL and RCG shares. I think HK may be restricted currently from acquiring more shares due to the trial but not sure.

      TPL share count at Horizon Kinetics Asset Management is roughly (70K) lower than May, 2022 (1,516,502) vs. the Feb, 2023 13F lists (1,433,278) shares. There may have been client redemption requests or some other reason for the lower share count. This court battle has got to be expensive for HK & Softvest.

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  6. You know it’s actually remarkable. I once thought of TPL as a business that couldn’t be screwed up no matter how hard a person tried. Even if they squandered the profit for 3 or 5 years, the business is still incredible and “you’ve still got the ranch”.

    And then they come up with “well, let’s dilute the existing shareholders into oblivion and simply steal the entire thing that way.”

    It reminds me of the story Charlie Munger tells about the horse race with only one horse. So the guy bets his entire net worth on the horse to win. Half way through the race the horse jumps over the fence, leaves the track, and runs away.

    You couldn’t even make this situation up.

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    • The two co-chairs are up for election, and they will be gone as Murray and Eric will not be encumbered by the shareholder agreement.

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      • Can you please explain your thinking here? The termination clause in the Stockholder Agreement at https://www.sec.gov/Archives/edgar/data/97517/000121390020014919/ea122864ex10-1_texas.htm contains a proviso that the Investor Group’s obligations continue to survive after the end of the 2022 annual meeting. This would mean that HK/SA need to continue to vote with the Board’s recommendation for Directors etc.

        —
        (a) Unless otherwise mutually agreed in writing by each party, this Agreement shall terminate (i) if the Distribution Time has not occurred, on the earliest to occur of (A) the date on which the Trustees determine, or take affirmative steps, to abandon the Proposed Transaction; (B) the date on which a Governmental Entity having jurisdiction over any party has issued any order, decree, ruling or injunction or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Proposed Transaction and such action has become final and nonappealable, or if there has been adopted any law that permanently makes consummation of the Proposed Transaction illegal or otherwise permanently prohibited; and (C) December 31, 2020 (the “Outside Date”); and (ii) if the Distribution Time has occurred prior to the Outside Date, following the completion of the 2022 annual meeting of stockholders of TPL Corp (the “Termination Date”); provided, however, that the respective obligations of the Investor Group under this Agreement (including the provisions of Sections 2, 3, 4, 6) shall survive until such time as no Investor Group Designee is serving on the Board; provided further that the obligations of Mission under this Agreement (including the provisions of Sections 2, 3, 4, 6) shall survive until such time as the Mission Designee is no longer serving on the Board.

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        • MS & EO will resign from the Board after the meeting to satisfy the end of the Agreement.

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  8. I dont think HK intends to sell or reduce their position unless they are getting waves of redemptions. If you look at their latest commentary in 1Q, they praise TPL (as a company) of having extradorindary economics.

    Also, to quote directly from their 1Q commentary: “Yet, we’ve seen how starkly impressive 9.6% is, because of how extraordinarily rare it is for 1) a business to
    sustain that rate of return, and 2) for an investor to hold it long enough to realize the compounding.
    As soon as a security is sold, the compounding chain is broken. That stock might one day become a very large portion of a portfolio; it is at that point that the next year’s 10% return, and the next, begins to truly dominate the portfolio’s return and create true wealth. But it is a rare investor who can avoid breaking the compounding chain.”

    Hence, I believe this part of the commentary is to address two things: 1) they have held TPL for decades and now they are in the position of seeing that compounding gain really take off which selling will simply interrupt the compounding and 2) to potentially tell their existing investors that they should look out to the longer game to hold off redemptions and look for the compounding machine to regain their glory.

    Also, prior to February this year, whenever HK or Murray buys TPL, they have to file due to them being directors or substantial shareholders. I dont have deep understanding on the way filings work, but surely they have to file a “sell” report as well right, and I have yet to see any selling reports yet. Please let me know if I am wrong with that assumption

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    • The market has spoken… it doesn’t like it when management and the board attempt a coup against the companies shareholders. Think about it: Who in their right mind would want to be a shareholder in a company whose management views you as an enemy and spends your money on lawyers in an attempt to harm and dilute you?

      Exhibit A:
      TPL is down -40% YTD while its O&G peers are generally up YTD, i.e., Shel up 7.2%, XOM up 16.4%, EPD up 6.8%, PSK up 1.2% YTD.

      Easy to attribute at least 40%+ of TPL share price decline YTD solely to TPL management and board malfeasance.

      HK Paradigm Fund down -27.98% YTD. Other HK strategies that hold a large stake in TPL also hurt badly. Many individual shareholders have also suffered and been harmed.

      It’s one thing to have Mr Market vote against your investment … that’s the game … but it’s another thing entirely to have a clique of company insiders conspire against you in an effort to enrich themselves at your expense. This is a hard pill to swallow and will not be forgiven or forgotten.

      There is no way for management and the coconspirators on the board to redeem themselves after this stunt. You cannot come back from abusing your fiduciary duties as officers of a public company, waging a war on your own investors, violating the trust of the market, and eviscerating the market value of the company you are supposed to be running. Regardless of the upcoming legal verdict, their reputations are in utter shambles and their careers destroyed. As a result, they will eventually be forced out and sacked. When that day comes, drinks are on me.

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      • Well said, love your post! TPL management would like us to believe the 50% price drop since November is due to fluctuations of the O&G market, and some natural profit taking by investors and funds, but I’d say your 40% attribution to mismanagement is on the low side. In his videotaped deposition shown at the April 17 trial, even Dave Barry himself had to admit that disruption over Prop 4 is weighing down the share price… of course, in his disillusioned arrogance and self-serving, HK/SV is to blame for that disruption. How laughable.

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  9. Sad but true…Murray and HK are slowly exiting their position and from recent calls it feels focus has shifted to Permian Basin Royalty Trust.
    Was a great ride

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  10. the uninformed should sell to the informed , we are in the most bullish energy enviroment in history, so I think its a great idea to sell the crown jewell

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  11. $16,600,000 in legal fees for the quarter works out to more than $7500/hr, 24/7. “Good stewardship” at its finest.

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  12. 13 more days before it’s all over but the shouting. I personally can’t see Judge Tasker ruling for TPL’s position, and HK/SV will be at the forefront of we shareholders cleaning house. Norris, Barry, and Glover should be the first out the door.

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  13. Re: Avi Benzvi, do you have hard filings documents to support that claim? I am not critizing, I just want to understand the situation that has led to your conclusion.

    Re: perots2933291da2, Rule 10b-5 has a 90 day cooling period? any info you can share would be great.

    The recent share price is definitely discouraging. However, as some of the posters here have indicated their intention to sell, I am actually thinking quite the opposite. My rationale is that for a crown jewel like TPL to be sold at current discount value, there has to be some macro or uncertainty around the company. While there are risks, there is also an opportunity as well… in my opinion

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    • Indeed I have not been able to find hard filings (only indication they unloaded 1M+ shares in the last months). That said Murray and HK have stopped accumulating TPL shares from Feb 15th, for the first time in nearly 3 years

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  14. This is my first rodeo in the Delaware court system. I thought I read the judge set the plan as 4 after trial briefs with a two week gap between each one. Do they have to be completed before he rules? That is a minimum of 8 weeks since April 17th. That would push his ruling out to after the 12th of June. Which is after the next date for the much adjourned 2022 Annual Meeting. Without a ruling the May 18th Meeting has no business to transact unless one side surrenders. [Fat chance of that]. Thinking about it shouldn’t the Plaintiffs first brief have been published by now?

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    • The meeting will be closed without the court ruling as Article 4 is in the hands of the judge. His decision will happen when it happens and the meeting closure is not dependent on it happening. His letter clearly said that there was no reason for the further adjournment that TPL requested to give him time for the 4 briefs and his decision.

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  15. PS: Just so that you know my position, I will also be adding shares prior to the meeting.

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  16. I keep reading comments from people who don’t seem to understand the ground rules for declassification of the TPL BOD! A short summary paragraph from the 2022 Annual meeting Proxy Statement explains the process. My understanding is that it will take 3 years to get all the directors on one year terms because of the length of their current terms under the classified board structure. Proposal 3 was the Declassification Amendment which I believe was approved by the stockholders.

    “If the Declassification Amendment becomes effective, commencing at the 2023 annual meeting of stockholders, all directors standing for election will become subject to election on an annual basis for a one-year term. The division of directors into classes shall terminate at the 2025 annual meeting of stockholders, with the expiration of the term of the directors elected at the Annual Meeting. Vacancies which may occur during the year may be filled by the Board and each director so appointed shall serve for a
    term expiring at the next election of the class for which such director shall have been chosen or, following the termination of the division of directors into classes, for a term expiring at the next annual meeting of stockholders. If the stockholders do not approve this proposal, then the Board will remain classified, with each class of directors serving a
    term of three years. Notwithstanding the foregoing, in all cases, each director will hold office until his or her successor is duly elected, or until his or her earlier resignation or “removal.

    This is all spelled out in detail on pages 20 and 21 of the Proxy Statement
    DEF 14A – 10/07/2022 – Texas Pacific Land Corporation which I accessed on the TPL Website at the following URL

    https://www.texaspacific.com/investors/sec-filings/all-sec-filings?form_type=DEF+14A&year=

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  17. Regarding the latest share price movements, here are some thoughts and numbers that I want to contribute/or more for happy sharing purpose:

    TPL share price correlation against WTI Oil has historically (using 2 year rolling daily data) been in the 45% to 50% level for most of its recent history. The correlation tends to be similar even when you shorten the data series from 2 years to as low as 6 months, obviously, more noise will be introduced witha shorter time span. Even during recent 6 months, that correlation holds, although its creeping towards the lower end. Hence, to be completely fair, a large magnitude of recent TPL’s price drop is due to the fact that oil price has dropped from its Nov high of nearing 90/barrel to today’s ~71/barrel.

    The reason why I believe share price today seems decent is:

    1) looking at the data, if we believe the oil price to be a driver of earnings and hence it should have a direct implication on share price then we can observe that the share price drop from Nov – Dec 2022 is due to oil price decline. (from around 90/barrel to ~75).

    The management however, should be accounted for the drop of share price from Jan to March, in my opinion, when share price dropped from 2000/share to 1700. Since this occured during a period when oil price was basically a flatten curve.The recent 3 weeks were somewhat driven by oil as it went from 82 to 71.

    Assumption here obviously is oil being the dominant driving force of share price, which i believe has some grounds since historically its correlation been high. All of this analysis was easier given S&P was basically flat since Nov 2022 til now.

    Share price from 2000 to 1700 is a 15% price drop… markets by in most are largely efficient i believe, and just simple maths of the 16M legal fees vs 85M net income can see that it was a 16% discount (101M net income without legal fees).

    2) another cause for share price decline is due to the fact that valuation gotten expensive… if we look at historical time series of its P/B ratio for example, its gotten to the 28x level, while historical average is around the 20 mark, we are currently at 13.8x….

    Obviously I am simplifying a lot of things here, but I beleive my analysis has some indication that this courrt case BS is largely priced in by the market. I think one reason why we have been more angry than we should is that we witness PBT US going up day after day (which I believe is somewhat due to TPL shareholders rotating out to PBT)…

    Ultimately, and apologies for this long and boring post, I think HK is in a great position to win the case and prevail for one. Secondly, the numbers seem to indicate that the bad news is somewhat priced in. This is not financial advice, just my 2 cents opinion that I want to share.

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  18. Here is the Directors List from Page 10 of the Proxy referenced in the prior post

    Name Age Title/Class
    David E. Barry 77 Director, Class III; Co-Chair
    Rhys J. Best 75 Director, Class II
    General Donald G. Cook, USAF (Ret.) 76 Director, Class II
    Barbara J. Duganier 64 Director, Class I
    Donna E. Epps 58 Director, Class II
    Karl F. Kurz 61 Director, Class I
    John R. Norris III 69 Director, Class III; Co-Chair
    Eric L. Oliver 63 Director, Class II
    Murray Stahl 68 Director, Class III
    Tyler Glover 37 Director, Class I; President and Chief

    “THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF RHYS J. BEST, DONALD G. COOK, DONNA E. EPPS AND ERIC L. OLIVER AS CLASS II DIRECTORS” Class II Directors Terms now end in 2025.

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    • It would be very helpful if some one could post the Table from the bottom of Page 20 showing in detail the transition to a declassified board. I have tried and I appear to be limited to un-formated text.

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      • I could do it if I could paste it in this reply, bur WordPress doesn’t seem to allow it. What happens is that anyone whose term expires beginning with those this year (Stahl, Barry & Norris) are only elected for 1 year. The same applies to 2024 (Glover, Duganier, and Kurz), and they are all elected for i year terms beginning in 2025.

        I hope this helps. Let’s start with voting all 3, especially Glover, completely out this year,

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        • Thank you! But there is still a Gotcha in the last sentence of the last paragraph of Proposal 3. “If our stockholders approve the Declassification Amendment, the Declassification Amendment will become effective upon filing a Certificate of Amendment with the Delaware Secretary of State. The Board intends to cause such filing promptly following stockholder approval, but the Board nevertheless would retain the discretion under
          Delaware law, until such time, to not implement the Declassification Amendment. In such case, the staggered structure of the Board would accordingly remain.”

          Until they file that Certificate of Amendment its Classified Board. Also, just voting a director out doesn’t negate the Boards power to appoint their replacement. [Be careful what you wish for, you might get Elon Musk GRIN].

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        • “[Be careful what you wish for, you might get ….].”

          I would take Elizabeth Warren, Greta Thunberg and Smoky the Bear over Barry, Norris and Cookie.

          For the record, I would also vote for Dylan Mulvaney over Epps as well. You can argue that neither actress is completely responsible for the bad decisions of their respective companies, but they didn’t mind getting paid in those decisions either.

          Liked by 2 people

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