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When we started our Daily Event Driven Monitor and began looking at insider purchases every evening – we were shocked by one company in particular: Texas Pacific Land Corp. (TPL). Texas Pacific Land is one of the biggest landowners in Texas and earns royalties from oil & gas drilling on its land. The company had never been on our radar because only one insider was buying shares, purchase values were small on any given day and they made via a 10b5-1 plan across multiple accounts. Over time, these purchases added up – creating a chart we had simply never seen before:
The purchases were all made by one investor, Murray Stahl, and while he made some direct purchases, most of them were done indirectly through various Horizon Kinetics funds. In addition to being a director of TPL, Mr. Stahl is also the co-founder and Chief Investment Officer of Horizon Kinetics.
Mr. Stahl continuously purchased shares of the company – his purchases were a regular occurrence in our Event Driven Monitor, and we would watch day after day as the stock continued to soar. The performance of Horizon Kinetics’ concentrated bets in the oil & gas industry and specifically in TPL, helped propel one of its funds to the top performing mutual fund in 2022 as discussed in this Wall Street Journal article. Three out of the top five top performing mutual funds in 2022 were Horizon Kinetics funds.
Mean reversion is one of the few things you can reasonably rely on in financial markets. In November 2022, the stock reached a peak of over $2,700 a share and began to decline. By February 2023, the stock was trading at around $1,800 a share – only $200 above when we first came across the company. This was also around the time when Mr. Stahl stopped purchasing shares.
Despite the sheer volume of Mr. Stahl’s purchases and how closely we watched the stock run up, we never truly considered TPL as an investment opportunity – thinking the drastic increase in stock price would eventually end.