11 thoughts on “Most Wonderful Time of the Year”

  1. Why does the TPL Board condone securities fraud??? Look at the last page of the second proposal in the link….

    During a trial in Delaware Chancery Court in April, TPL Director Karl Kurz described a portion of TPL’s 2022 proxy materials as containing a “false statement”. The precise language from the trial transcript is below:
    Q: And Glass Lewis opined that TPL does not have sufficient shares to meet its existing obligations; right?
    Kurz: That’s what it says, correct.
    Q: That was a false statement, wasn’t it?
    Kurz: I think we had — we had, yeah, I would say we had enough shares to meet our existing obligations.
    Q: So that’s a false statement; correct, sir? Kurz: I would say it’s a false statement.
    Q: And TPL sent this false statement to all of its shareholders before the 2022 annual meeting; didn’t it?
    Kurz: Looks like it did, yes.
    …
    Q: Is this an honest way to deal with shareholders of a public company? Kurz: I would not like to have seen that statement in there.

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  2. Completely unrelated, but latest 13F shows Horizon continues to reduce their stake. Their position is down over 100k shares in the last year.

    You have to hope it’s just forced redemptions (which doesn’t make me feel great either), because the alternative is much worse…

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  3. The daily SEC Form 4 filings that many of us see from TPL indicate that Stahl is acquiring shares daily for his various Horizon Kinetics funds. But then the 13F comes out and reveals that his funds have been downsizing their holdings of TPL. Does anyone know what the Form 4s only report the share acquisitions but not the disposals?

    Seems like such a mixed message. I assume Stahl is still bullish on TPL (especially as it looks promising that he will prevail in the court case), but it is a bit concerning about the net outflow of TPL from Horizon funds.

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    • Not sure about your technical question JP,

      but HK’s most recent quarterly commentary (see below for SA article or HK website links for the same thing) waltzes on about the positives of royalty companies in general. They cover Sabine royalty (instead of TPL) this quarter as they specifically did not want to discuss TPL because of headlines.

      With governance moving (more rapidly than I dreamed) in the right direction and producers announcing recent improvements to fracking (maybe doubling the recoverable oil) things seems better than ever. HKs general inflation focus still seems aligned with TPL. The positive momentum to share price seems to support far more buyers than sellers. MS seemed all in for the lawsuit so it would be surprising if he was changing his mind now.

      still, FUB&N

      https://seekingalpha.com/article/4622722-horizon-kinetics-q2-2023-commentary

      Click to access Q2-23-Commentary_FINAL.pdf

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      • It seems like a lot hinges on the lawsuit. Since April 17th was the trial date, and we’re already four months in after it, when is the judgment expected?

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        • I’m not so sure a lot hinges on the lawsuit result.

          If the defendants win, its over. If the plaintiffs win, the defendants most certainly would appeal. The architects Barry and Norris are leaving the board in November. Appeals take time, longer than Barry and Norris have left.

          There will be a new chairman or co-chairman of the board. The legal fight has been so bruising and expensive I doubt without Barry and Norris there will be sufficient interest in continuing.

          The tide has turned and the anticipated proxy fight this year no longer needs to happen. The market hates uncertainty and removing this potential battle has had a dramatic increase in the stock proce.

          Delaware Chancery decisions are often released on Friday’s. I think it could happen any Friday in August or September.

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  4. The Ownership turnover is large during 2nd quarter. Group after group have divested 100 percent of their shares but there are new shareholders who have just bought TPL. I hope the new owners become knowledgeable of the TPL blog and the details of what has happened. Let’s hope they appreciate the hard work of HK/SV going forward.

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  5. I wondered how many people had actually reviewed the proposals that are being excluded. I know I hadn’t. So here is a summary of them copied from the SEC filings:

    Proposal 4 – Shareholder Right to Remove Directors without Cause
    Shareholders ask our Board of Directors to take the steps necessary to permit removal of directors by a majority vote of shareholders, with or without cause, to the fullest extent possible and that this be called out in the bylaws and/or Articles of Incorporation. TPL’s present bylaws provide excessive job security for the Board of Directors. The bylaws can provide job security to a director who clearly needs to be removed but the director insists with finding fault with credible evidence. In addition, the bylaws can even provide job security to a director who has been convicted of a felony by a court of competent jurisdiction so long as that conviction remains subject to direct appeal! Shareholders should hold the power to vote on removing directors without the need for cause. This proposal represents an important step forward in director accountability.
    Please vote yes. Shareholder Right to Remove Directors without Cause – Proposal

    Shareholders request that TPL’s Board of Directors perform a review of the Company’s processes surrounding the preparation of its SEC-filed Proxy Materials.

    Resolved, that the Board of Directors of the Company adopt a policy whereby, in connection with any proposal to increase the authorized number of shares of common stock of the Company, other than solely through a stock split, the Company request the New York Stock Exchange (“NYSE”), when first submitting the Company’s proxy materials to the NYSE for review, not to categorize such proposal as routine under Rule 452 of the NYSE’s Guide.

    RESOLVED: The stockholders will consider it a breach of fiduciary duty for the board of directors to authorize severance pay for any senior manager in excess of such individual’s base annual compensation unless it is unanimously approved.

    SUPPORTING STATEMENT
    The Company has been engaged in contentious litigation with certain directors. Given this tension in the boardroom, we believe it is possible that at some point there may be changes to the board of directors and to senior management. The purpose of this non-binding proposal is to advise the directors that the stockholders believe that, unless unanimously approved by the board, authorizing any severance pay that would constitute a lucrative golden parachute for any senior manager may be subject to a legal challenge as a breach of a director’s fiduciary duty.

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