Texas Pacific Land (TPL) is presented as a unique, capital-light compounder offering high-margin exposure to energy and infrastructure growth—without the risks typically associated with either. The company owns approximately 873,000 acres in the Permian Basin and earns revenue through oil and gas royalties, water services, easements, and surface leases. TPL boasts an 87% EBITDA margin and 65% FCF margin, with just 110 employees. Its historical performance has been exceptional: the third-best U.S. stock over the last 30 years with a 32% IRR, trailing only Netflix and Nvidia.
Rather than picking winners in volatile sectors like AI models or chips, the presentation argues for “owning the dirt”—the scarce land, water, and energy needed for the data center boom. TPL benefits from this shift, given its critical natural resource position in West Texas. In FY24, 71% of operating cash flow went to dividends, and the remainder was allocated to buybacks and organic growth. Investors, it’s argued, get a fairly priced legacy energy business and “free” upside from infrastructure expansion, renewable energy leasing, and data center land use—without putting up risk capital themselves.
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