Quick question: do acquisitions need to be approved by shareholders? The cash balance continuing to build alongside minimal buybacks makes me think this dumbass management team is planning a large all-cash acquisition if they can’t get Prop 4 to pass.
Just that anything considered an Extraordinary Transaction seems to require a stockholder vote based on the language in the Stockholder’s Agreement between TPL and HK/SV. And that HK/SV do not have to vote with the board on Extraordinary Transactions (hence this whole lawsuit BS).
From the agreement:
The term “Extraordinary Transaction” means any tender offer, exchange offer, share exchange, merger, consolidation, acquisition, business combination, sale, recapitalization, restructuring, or other matters involving a corporate transaction that require a stockholder vote
I would suggest you review page F-13 of the TPL 2022 Annual Report in the section titled Real Estate activity where sales and purchases for years 2022, 2021, and 2020 are listed. Was there any vote of the stockholders for these actions?
According to the Annual Report they are buying and selling!
Land Sales
For the year ended December 31, 2022, we sold6,392 acres of land in Texas for an aggregate sales price of $9.7 million, an average of approximately $1,515 per acre.
For the year ended December 31, 2021, we sold30 acres of land in Texas for an aggregate sales price of approximately $0.7 million, an average of approximately
$25,000 per acre.
For the year ended December 31, 2020, we sold22,160 acres of land in Texas for an aggregate sales price of approximately $16.0 million, an average of
approximately $721 per acre. Additionally, we recognized land sales revenue of $1.4 million for the year ended December 31, 2020 related to land exchanges where we had no
cost basis in the land conveyed.
Land Acquisitions
For the year ended December 31, 2022, we acquired177 acres of land in Texas for an aggregate purchase price of $0.6 million, an average of approximately $3,585
per acre.
For the year ended December 31, 2021, we acquired88 acres of land in Texas for an aggregate purchase price of approximately $0.5 million, an average of
approximately $6,086 per acre.
For the year ended December 31, 2020, we acquired756 acres of land in Texas for an aggregate purchase price of approximately $3.9 million, an average of
approximately $5,134 per acre (excludes land acquired through the land exchange as discussed above).
Any legal eagles please weigh in, but I do not interpret the Extraordinary Transaction clause to mean an acquisition would need to be approved by shareholders. I think Carl is raising an interesting point that management could use the cash on the books to pursue an acquisition without the need for shareholder approval. On a related point, I wonder what requirements TPL would have for disclosing to shareholders (and bringing to a vote) if they learn of a potential takeover offer.
Well, just the fact that two of us here aren’t fully sure of what constitutes a shareholder vote, I’m sure that means we’ll be in court over this matter next at some point…
This management team and board is a joke. Cut the executive and board comp, stop using my money to sue shareholders, and buy back stock every single day.
I truly wonder if TPL thinks they are actually in the right (aka they’re just idiots), or if they’re crooks in it for themselves. Probably a bit of both.
Thank you for sharing your letter and sending to the BOD.
Well written and very direct. Collapses any reason to keep the legal fight going, since the Glass Lewis decision changes everything. The BOD’s response to the Glass Lewis recommendation will be insightful on how they view their now significantly weakened case.
Reading the comments it seems that at least some of you aren’t aware that TPL has a 250 MILLION dollar share buyback in progress. It was announced before the November meeting and due to commence when the 100 million buyback ended in 2022. First hit i got from a search:
Texas Pacific Land Corporation announces an Equity Buyback for $250 million worth of its shares. 11/02/2022 | 03:17pm EDT
Texas Pacific Land Corporation (NYSE:TPL) announces a share repurchase program. Under the program, the company will repurchase up to $250 million worth of its outstanding common stock. The company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations.
Tranche Update on Texas Pacific Land Corporation’s Equity Buyback Plan announced on November 2, 2022. 05/03/2023 | 04:21pm EDT
From January 1, 2023 to March 31, 2023, the company has repurchased 3,627 shares, representing 0.05% for $6.75 million. With this, the company has completed the repurchase of 3,627 shares, representing 0.05% for $6.75 million under the buyback announced on November 2, 2022.
Boy, what impressive progress… Are you happy with that when there is a near $600m cash balance? You’re just proving everyone’s point that complains about the pace of buybacks lately.
Only $243.25 million to go in this authorization! I have good idea where $16 million could have come from!
Would you be happier if they had spent the quarter Billion buying back stock in the 2000 dollar range? Apparently stock buybacks don’t require stockholder approval. If Simply WallStreet’s DCF analysis is correct the sweet spot for the stock is around $1300.
I wondered if the purchased shares were being retired.
“The company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations.” Sounds to me like they are going to fund it out of cashflow not out of the cash on hand kitty.
When I look at the StockCharts.com chart I see a Falling knife [Permalink attached] with no indication that it is approaching a low price. Simply Wall Street is just another data point. I see a company with good fundamentals and bad governance. Which does not make an attractive investment.
The problem with the way they are doing any buybacks is that they are NOT retiring the shares. They are using them as Treasury shares that they could use for acquisitions or some of their nefarious benefits to themselves.
I am genuinely baffled by this. What does a buyback even mean (or do) if the shares aren’t retired? It’s just taking them from one owner and giving them to another (the company). I guess it lowers the dividend payout?
To the points made here about the buyback shares not actually being retired, that is why I am no longer too excited about that way of returning equity to shareholders. Rather, I would much prefer dividends (especially the “special” dividends they have paid out in recent years) as a sure way for me to get a piece of the profits. Anyone disagree?
FWIW, I don’t disagree with you. Changing the legal status to C-corp could reasonably be interpreted as now operating TPL as something other than a slowly dissolving asset. My issue with this new approach is that I have no faith that Glover will make smart or shareholder friendly acquisitions. Nor do I believe the governance provided by the “board” will insure good oversight of that stewardship.
Lawyers operating an oil company, what could possibly go wrong.
The Texas Pacific Land Trust Investor 
Amen
LikeLiked by 1 person
Quick question: do acquisitions need to be approved by shareholders? The cash balance continuing to build alongside minimal buybacks makes me think this dumbass management team is planning a large all-cash acquisition if they can’t get Prop 4 to pass.
LikeLike
Apologies – just found the language in the stockholders agreement on Extraordinary Transactions. Internal crisis averted (hopefully).
LikeLike
Would you mind educating me on what you found?
LikeLike
Just that anything considered an Extraordinary Transaction seems to require a stockholder vote based on the language in the Stockholder’s Agreement between TPL and HK/SV. And that HK/SV do not have to vote with the board on Extraordinary Transactions (hence this whole lawsuit BS).
From the agreement:
The term “Extraordinary Transaction” means any tender offer, exchange offer, share exchange, merger, consolidation, acquisition, business combination, sale, recapitalization, restructuring, or other matters involving a corporate transaction that require a stockholder vote
LikeLike
I would suggest you review page F-13 of the TPL 2022 Annual Report in the section titled Real Estate activity where sales and purchases for years 2022, 2021, and 2020 are listed. Was there any vote of the stockholders for these actions?
LikeLike
Land sales were literally the sole purpose of the trust. I’d hope the idiots can handle that without needing to run it by us.
Buying assets from OXY? Now that seems Extraordinary and I’d be eager to shoot down ASAP 🙂
LikeLike
According to the Annual Report they are buying and selling!
Land Sales
For the year ended December 31, 2022, we sold6,392 acres of land in Texas for an aggregate sales price of $9.7 million, an average of approximately $1,515 per acre.
For the year ended December 31, 2021, we sold30 acres of land in Texas for an aggregate sales price of approximately $0.7 million, an average of approximately
$25,000 per acre.
For the year ended December 31, 2020, we sold22,160 acres of land in Texas for an aggregate sales price of approximately $16.0 million, an average of
approximately $721 per acre. Additionally, we recognized land sales revenue of $1.4 million for the year ended December 31, 2020 related to land exchanges where we had no
cost basis in the land conveyed.
Land Acquisitions
For the year ended December 31, 2022, we acquired177 acres of land in Texas for an aggregate purchase price of $0.6 million, an average of approximately $3,585
per acre.
For the year ended December 31, 2021, we acquired88 acres of land in Texas for an aggregate purchase price of approximately $0.5 million, an average of
approximately $6,086 per acre.
For the year ended December 31, 2020, we acquired756 acres of land in Texas for an aggregate purchase price of approximately $3.9 million, an average of
approximately $5,134 per acre (excludes land acquired through the land exchange as discussed above).
LikeLike
That is helpful, thank you
LikeLike
Any legal eagles please weigh in, but I do not interpret the Extraordinary Transaction clause to mean an acquisition would need to be approved by shareholders. I think Carl is raising an interesting point that management could use the cash on the books to pursue an acquisition without the need for shareholder approval. On a related point, I wonder what requirements TPL would have for disclosing to shareholders (and bringing to a vote) if they learn of a potential takeover offer.
LikeLike
Well, just the fact that two of us here aren’t fully sure of what constitutes a shareholder vote, I’m sure that means we’ll be in court over this matter next at some point…
This management team and board is a joke. Cut the executive and board comp, stop using my money to sue shareholders, and buy back stock every single day.
I truly wonder if TPL thinks they are actually in the right (aka they’re just idiots), or if they’re crooks in it for themselves. Probably a bit of both.
LikeLike
Thank you for sharing your letter and sending to the BOD.
Well written and very direct. Collapses any reason to keep the legal fight going, since the Glass Lewis decision changes everything. The BOD’s response to the Glass Lewis recommendation will be insightful on how they view their now significantly weakened case.
Well played, Brian. Or should we call you Mr. X?
LikeLike
Reading the comments it seems that at least some of you aren’t aware that TPL has a 250 MILLION dollar share buyback in progress. It was announced before the November meeting and due to commence when the 100 million buyback ended in 2022. First hit i got from a search:
https://www.marketscreener.com/quote/stock/TEXAS-PACIFIC-LAND-CORPOR-14647/news/Texas-Pacific-Land-Corporation-announces-an-Equity-Buyback-for-250-million-worth-of-its-shares-42214494/
Texas Pacific Land Corporation announces an Equity Buyback for $250 million worth of its shares. 11/02/2022 | 03:17pm EDT
Texas Pacific Land Corporation (NYSE:TPL) announces a share repurchase program. Under the program, the company will repurchase up to $250 million worth of its outstanding common stock. The company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations.
LikeLike
From the same MarketScreener website.
Tranche Update on Texas Pacific Land Corporation’s Equity Buyback Plan announced on November 2, 2022. 05/03/2023 | 04:21pm EDT
From January 1, 2023 to March 31, 2023, the company has repurchased 3,627 shares, representing 0.05% for $6.75 million. With this, the company has completed the repurchase of 3,627 shares, representing 0.05% for $6.75 million under the buyback announced on November 2, 2022.
© S&P Capital IQ 2023T
LikeLike
Boy, what impressive progress… Are you happy with that when there is a near $600m cash balance? You’re just proving everyone’s point that complains about the pace of buybacks lately.
Only $243.25 million to go in this authorization! I have good idea where $16 million could have come from!
LikeLike
Would you be happier if they had spent the quarter Billion buying back stock in the 2000 dollar range? Apparently stock buybacks don’t require stockholder approval. If Simply WallStreet’s DCF analysis is correct the sweet spot for the stock is around $1300.
I wondered if the purchased shares were being retired.
“The company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations.” Sounds to me like they are going to fund it out of cashflow not out of the cash on hand kitty.
LikeLike
I sincerely hope you are not looking to a Simply Wall Street DCF analysis for advice, and I mean that honestly not trying to be smug.
LikeLike
When I look at the StockCharts.com chart I see a Falling knife [Permalink attached] with no indication that it is approaching a low price. Simply Wall Street is just another data point. I see a company with good fundamentals and bad governance. Which does not make an attractive investment.
https://schrts.co/FyyQpFaG
LikeLike
The problem with the way they are doing any buybacks is that they are NOT retiring the shares. They are using them as Treasury shares that they could use for acquisitions or some of their nefarious benefits to themselves.
LikeLike
Yep. TPL is becoming a case study on agency risk.
LikeLiked by 1 person
HBS writers are salivating
LikeLike
I am genuinely baffled by this. What does a buyback even mean (or do) if the shares aren’t retired? It’s just taking them from one owner and giving them to another (the company). I guess it lowers the dividend payout?
Just cancel the damn shares!
LikeLiked by 1 person
To the points made here about the buyback shares not actually being retired, that is why I am no longer too excited about that way of returning equity to shareholders. Rather, I would much prefer dividends (especially the “special” dividends they have paid out in recent years) as a sure way for me to get a piece of the profits. Anyone disagree?
LikeLike
FWIW, I don’t disagree with you. Changing the legal status to C-corp could reasonably be interpreted as now operating TPL as something other than a slowly dissolving asset. My issue with this new approach is that I have no faith that Glover will make smart or shareholder friendly acquisitions. Nor do I believe the governance provided by the “board” will insure good oversight of that stewardship.
Lawyers operating an oil company, what could possibly go wrong.
LikeLiked by 2 people