"One company that I’m real excited about, it’s the most unique unusual company in the 27 years that I’ve been doing this, that we’ve ever come across. It’s a company called Texas Pacific Land Trust (TPL), and it’s just about one of the oldest companies on the New York Stock Exchange.
It’s a self-liquidating trust. The railroads, in the early 1900s, a lot of those went out of business. They set up this trust, and it’s a self-liquidating trust. And what is it? They own about 1 million acres of land in West Texas, a little under 1 million acres of land.
So, with just under 10 million shares outstanding, each share represents about one-tenth of an acre. And this land is being used for a lot of different purposes. This is rural land out in West Texas, but there’s a lot of drilling going on in this area, and that’s making this land a lot more valuable.
We’ve done a lot of surveys on the company, gone to a lot of the local county tax records, and figured out what the land is worth in that are—just from land sales—and we estimate the land to be worth in excess of probably $55 a share. And if you tack on the oil and gas royalties that they’re receiving, that puts another probably $20 per share on the stock, which puts it in the $70s.
The stock trades around $48, but the interesting thing: They only have seven employees, and their only business is selling land and collecting these royalties, and with that money, they buy back stocks.
Also read: The Bare Essentials of Share Buybacks So, there is a shrinking base of outstanding shares, and so it’s a tremendous way over an extended period of time to pass on wealth. But as more and more drilling is being done in this Wolfcamp area in West Texas, which they own a lot of acres in, you’re seeing a lot of activity in this. We think this stock is very, very undervalued."