Shrinking Denominators

How is Texas Pacific Land trust(TPL) similar to Bitcoin?

Thanks to a reader for a heads up on this one!

Written in March 2018.  Simpler times.

Right up my alley though as I own both.  It’s all about those long tails.

At Ikkurty Capital, we focus on Blockchain assets and we don’t spend any time on stocks. There is an interesting lesson to be learned from understanding why the Texas Pacific Land Trust stock has performed so well. This company achieved this by continuously buying back shares, reducing its outstanding shares from 500 million to 7.85 million. Since outstanding shares are reducing, every time they buy back a share, the next share purchase is a greater proportion of the remaining shares. They built a compounding machine. The supply of shares is shrinking; therefore, the price has to just keep going up. This is similar to Bitcoin in many ways. Bitcoin’s total supply is 21 million which is supposed to be released by 2140. Bitcoin’s current circulating supply is close to 17 million. But we do know for a fact that every year a large number of people are losing their passwords and losing access to their wallets. Based on a study, nearly 3.78 million bitcoins are lost forever. This is exactly like the shares being retired in case of TPL. Every year a vast number of people are going to lose the coins, due to many human errors. All those lost bitcoins are a gift to all the people who are still holding their bitcoins, causing the value of remaining coins to go up. In the case of bitcoin, when you lose the private key you lost your money permanently. It is exactly like retiring stock by buying back shares in the open market. The stock market is a mechanism to transfer wealth from impatient holders of capital to patient holders of capital. All those patient investors of bitcoin will be well-rewarded from the money lost from the impatient holders, who do not understand the mathematics behind bitcoin.

An Update from Murray and Steven

FRMO Investor Call

Required listening if you are a TPL-head (or a BTC-head) like myself.   Unfortunately, the transcription isn’t great.   Ctrl+F is your friend here.

But you can’t forget that what you are sitting on, you are sitting on like the greatest hydrocarbon property in North America and you can even make a strong argument maybe even the world. The technology keeps getting better. This pipelines being constructed as gas being flared that in 11 month is not going to be flared and this is going to theirs is leases, there is water being sold is all kind of things happening except those variables don’t change in any appreciable way in a matter of week.

Call details if you can’t get it on SA.

Murray Stahl, Chairman and CEO, and Steven Bregman, President and CFO, will host a conference call on Thursday, January 17, 2019 at 4:15 p.m. ET. Only questions submitted to before 1:00 p.m. on the day of the call will be considered. The call can be accessed by dialing 1-855-710-4181 (domestic toll free) or 334-323-0516 (international toll) and entering the following conference ID: 5792922. A replay will be available from 7:15 p.m. on the day of the teleconference until Thursday, November 15, 2018. To listen to the archived call, dial 1-888-203-1112 (domestic toll free) or 719-457-0820 (international toll) and enter conference ID number 5792922.