It’s very possible that I’m wrong about this but it looks like HK is going to have to file a Form 4 on a daily basis (if they trade) given their new “insider” status after Friday’s filings. I don’t run stocks but my experience with similar issues tells me that this filing is likely an operational PITA for the team. It seems like a small thing but I bet doing this type of work was considered in the calculus of nominating an alternate trustee. Again, its small, but it points to the decision having been well considered.
Just my gut…
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 email@example.com 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.
When we first bought into this in 1995, we basically signed on for a 5% or so return from stock buybacks and the dividend, with pretty much infinite call options on what they could make happen with the land. Maybe people wanted to develop it. Maybe there was oil there that could one day be economically extracted. We didn’t really know, but we liked the potential odds.
HK has the same questions as the rest of us.
With respect to capital allocation, an increasingly important question for TPL
is how it will deploy its increasing earnings. The trust has been repurchasing and
cancelling shares for 120 years, but there’s a limit to the number of open-market purchases that can be made when average daily trading volume is less than 20,000 shares. With capital-expenditure requirements limited, it’s not a stretch to conclude we’re going to see a big increase in dividend payments. The dividend yield is still very low on a $600 share price, but in February of this year the Trustees raised the regular dividend from 35 cents per share to $1.05, and paid an additional special dividend of $3 per share. One doesn’t require a graph to infer the near-term slope of the line. We wouldn’t be surprised if over time TPL qualified for a dividend ETF or a REIT ETF.
“The report’s original estimation, almost 19 years ago when there were 15.4 million shares outstanding, was that by 2010, which was as far as the projection went, the share count would have shrunk to only 8.3 million. As of last September there were 8.6 million, so the model wasn’t all that far off.”
The above was written in 2014. As of July 31 2018, there are 7,778,426 shares outstanding.
The report linked above is from the folks at Horizon Kinetics in New York. HK was on the TPL train early and is still a top source of information and opinion. This 23 year old report is great resource for understanding TPL at a base level. Of note:
“Confidence in the relative safety of this investment resides in the capacity and predilection for share repurchases by a debt-free company selling very near the value of its tangible assets. Relative to the average industrial or service company, Texas Pacific is not subject to typical competitive forces nor to marginal changes in consumer and industrial demand. It has very stable base rents and, unlike most energy companies, which must support high fixed costs, its royalty revenues are purely additive, regardless of volume. Its basic business, land and oil, are classic inflation hedges.”