Big Leagues

tpltblogger16 Comments

When this blog started in 2018 TPL was an index ineligible trust.

We owe a ton of gratitude to Eric, Murray, and many other engaged investors who willed (blood, sweat, tears, and legal fees) TPL into its current form of modern governance.

The next chapter after that was business scaling, revenue diversification, investor awareness building, and discipline in capital allocation. For as cantankerous as I get about the threat of equity sales, it is undeniable that management is now executing at a high level.

From the individual investor perspective, it’s been a hell of a ride.

Still in awe!

16 thoughts on “Big Leagues”

  2. For as cantankerous as I get about the threat of equity sales, it is undeniable that management is now executing at a high level.

    Why “undeniable”? Why “high level”? Just because of price appreciation and index inclusion?

    In my mind, the credit for current performance goes to the people and factors you mention: “We owe a ton of gratitude to Eric, Murray, and many other engaged investors who willed TPL into its current form of modern governance.”

    Management can still ruin it if they don’t understand true value creation—which it seems they do not—and instead use the stock as currency to focus on empire building…

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  4. Looking at the type 4 reports on the SEC filings on the TPL website it’s obvious the two members of management selling shares in October didn’t expect the November price run up either. The good news is they still have skin in the game.

    Trying to understand what is driving the price increase it can’t be Wall Street Analysts recommendations there don’t appear to be any following TPL. There is a robust Analysts following of TPL on Seeking Alpha [including Murray].

    Looking at the short interest it has declined in four of the last five two-week reporting periods since the last two weeks of August. There are still 1,266,888 shares sold short reported as of October 31st. The next report from FINRA will be available Monday evening Nov 25th for the first two weeks of November. It could be short covering.

    It could be the expectation of purchases by the Funds that follow the S&P 500 index as they rebalance their holdings. That is what appears to have resulted in the price increase after TPL was include in the S&P midcap 400.

    Any other candidates?

    I am left remembering the advice from a good friend from Houston who told me local wisdom is “NEVER SELL A ROYALTY INTEREST”! all I can say is Boy Howdy was he right.

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      • I was referring to candidates for the cause of TPL’s price runup. Not other trust ideas. According to a Seeking Alpha article SJT is not currently paying distributions due to Capex issues.

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        • my response was to the never sell royalties advice. Royalties built on commodities will usually have similar volatility to the underlying. SJT has had multiple huge runs in its history and the never sell argument did not work. TPL is a better business and has had a repricing of shale oil but every asset has a price. Personally I think it’s here or even a little lower for TPL, obviously depending on oil prices. We’ll see.

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  5. congrats to all. I can’t help but wonder though, what the real value of this is. It’s not infinite. At some point any possible future cash flow is already in the price. I thought it was close at about $20B. $40B seems rich unless oil prices skyrocket or production continues to grow for nearly a decade.

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  6. Huge day. Congrats to all on being a bit richer than you were yesterday.

    And secondary congrats to shareholders of Marathon and Atlas Energy Solutions. For some reason, shareholders of Mueller Industries don’t seem to want it in a better index (down ~6% on the news lol).

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  7. A Red-Hot Oil Stock is Joining the S&P 500 — WSJ

    Dow Jones NewswiresNovember 22, 2024 11:39 AM ET

    Shares of Texas Pacific Land are adding to their big run this year following the announcement that the oil-patch property owner will be added to the S&P 500 next week.

    Texas Pacific started as the estate of a railroad that went bankrupt in 1888 and owns a huge swath of the Permian Basin, which is America’s most prolific drilling region. In recent years its conversion from a liquidation trust to a corporation and more active management of its part of the oil patch has sent the shares surging.

    Inclusion in the S&P 500 means that mutual funds and ETFs that track the broad index will be buying Texas Pacific shares. In this case, Texas Pacific could help lift the index as well.

    The stock has more than tripled this year, outperforming even chip maker Nvidia in 2024.

    I think that last sentence puts what TPL stock has done in perspective!

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  8. Been following the company for many, many years (I think mid 2010s?), started buying in early 2022 and haven’t looked back.

    My hockey coach used to use the saying “major league” when talking about the highest level in, well, anything. Congrats to all on being about as major league as you can get in stocks!

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  9. Been following the company for approximately a decade and started buying in early 2022. Haven’t looked back since. Congrats to all on the momentous day! If you had told me when TPL went c corp that it’d be in the S&P 500 in a couple years time I’d call you crazy.

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  11. I think we see another 3-1, or even 5-1 stock split soon. Frankly, the stock is still fairly illiquid, and with now all of the forced buying from Index products … we need a larger sharecount.

    I’ve been following TPL since it’s market cap was $800m. Yesterday was historic.

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  12. From a cursory look at recent Permian deals, TPL seems at intrinsic value now, based on mineral rights alone.

    That brings into focus the optionality inherent in the company which could drive earnings power, i.e., (1) data centers/ crypto miners, (2) water desalination patent, and (3) renewables.

    None of those were part of my investment thesis when I entered the position in 2019. They must be valued now.

    That requires expanding my circle of competence.

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  13. Don’t forget the 1,266,888 shares sold short as of 10/31/24 5.52% Short Interest 18.66 days to cover at the then average daily volume of 98,295. About 3% of those shares were sold short when TPL joined the S&P Midcap 400 at the end of June 2024. My guess is that the 3% sold in the 731 to 787 range, the older shorts even lower. Some of the shorts have been covered since 8/15 when they totaled 1,437,652 shares sold short Now the shorts are under water by at least $1000 a share. They have been covering in four of the five two-week periods since 8/30/2024. But their efforts have been constrained by the daily volume under 100,000 shres per day. My source for this information is the FINRA website where they publish the short interest about 9 days after the end of a two-week reporting period. The next report is scheduled for Monday November 25th in the early evening. I wondered if we were seeing a short squeeze before the S&P500 announcement.

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