LRT Capital has a Positive Outlook on Texas Pacific Land Corp. (TPL)

LRT Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of +18.39% was recorded by the LRT Economic Moat strategy year-to-date, extending its 12-month returns to +35.34%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

LRT Capital Management, in its Q3 2021 investor letter, mentioned Texas Pacific Land Corporation (NYSE: TPL) and discussed its stance on the firm. Texas Pacific Land Corporation is a Dallas, Texas-based land holding company with a $9.6 billion market capitalization. TPL delivered a 70.98% return since the beginning of the year, while its 12-month returns are up by 101.47%. The stock closed at $1242.99 per share on November 26, 2021.

Here is what LRT Capital Management has to say about Texas Pacific Land Corporation  in its Q3 2021 investor letter:

“Long time readers will know that we rarely invest in commodity businesses. However, there are periods in the market where commodity-based businesses outperform the broad indexes by a wide margin. Therefore, in order to have balance in the portfolio, we have long searched for a competitively advantaged company in the commodity space. We believe that Texas Pacific Land Trust (TPL), meets that criteria. Formed out of assets of formerly bankrupt railroads, TPL controls the largest acreage of land in the Permian basin – the center of the US shale oil industry. The company has two main sources of income: 1) royalties from oil & gas extracted on its properties – essentially a free call option on future oil prices and production; and 2) a water business which develops water resources and sells services to the fracking industry. We see TPL as an effective way to diversify the portfolio into a commodity exposed business that has a history of smart capital allocation and low risk of financial distress during periods of low oil prices. The company has no debt, and $281 million in cash. The company uses most of its cash flows to pay dividends and repurchase shares.”

Based on our calculations, Texas Pacific Land Corporation (NYSE: TPL) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TPL was in 24 hedge fund portfolios at the end of the third quarter of 2021, compared to 21 funds in the previous quarter. Texas Pacific Land Corporation (NYSE: TPL) delivered a -9.99% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.