Murray Stahl Slashes Portfolio but Remains Bullish on These Five Stocks

#2. Texas Pacific Land Trust (NYSE:TPL)

– Number of shares held by Horizon as of March 31: 1.65 Million Sub-Share Certificates

– Value of Horizon’s holding as of March 31: $239.51 Million

Murray Stahl and his team were mildly bullish on Texas Pacific Land Trust (NYSE:TPL) during the first quarter of this year, as they boosted the stake in the company by 30,441 shares during the three-month period. Horizon owns a stake of 1.65 million shares of the landowner as of March 31, which are valued at $239.51 million. Texas Pacific Land Trust is one of the largest landowners in Texas, owning approximately 909,274 acres located in 18 different counties. The trust generates revenues from various avenues, including oil and gas royalties, grazing leases, easements, sundry and specialty leases, as well as land sales. The company’s total operating and investing revenues for 2015 reached $79.44 million, up from $55.22 million reported for 2014. Presumably, the increase was mainly driven by higher land sales and easements and sundry income, partially offset by lower oil and gas royalty revenue. Net income for 2015 increased to $50.04 million from $34.77 million in 2014. In February, the company’s Board of Trustees declared a cash dividend of $0.31 per sub-share. Texas Pacific Land Trust has increased annual dividend payments for 13 consecutive years. Paul J. Isaac’s Arbiter Partners Capital Management had 114,598 sub-share certificates of Texas Pacific Land Trust (NYSE:TPL) in its equity portfolio at the end of 2015.

#1. Howard Hughes Corp (NYSE:HHC)

– Number of shares held by Horizon as of March 31: 3.70 Million

– Value of Horizon’s holding as of March 31: $392.31 Million

Howard Hughes Corp (NYSE:HHC) was the largest equity holding in Horizon’s equity portfolio at the end of the January-to-March quarter, comprised of 3.70 million shares valued at $392.31 million. The New York-based investment firm trimmed its stake in the company by 483,769 shares during the first quarter of this year. The quarter-end stake accounted for 9.74% of the firm’s equity portfolio. Howard Hughes operates as a real estate company, which was spun out of General Growth Properties Inc. (NYSE:GGP) when exiting bankruptcy protection back in 2010. Howard Hughes emerged as a public company as a collection of 34 under-appreciated assets, including retail, office, multi-family and hospitality properties. One of those properties included the South Street Seaport in Manhattan, which “was on the books for a few million dollars” when the company was spun off, according to Horizon’s fourth-quarter letter to investors mentioned above. New York’s South Street Seaport is one of the most visited tourist attractions around the globe. Mr. Stahl and his team believe that “the cash flows from the Howard Hughes development activities will climb rapidly” in the foreseeable future. “When they do, they can be shielded to some extent by the company’s $300+ million operating loss carryforwards. However, as its taxable income becomes significant in the next few years, the company is likely to think about both the allocation of that income, perhaps toward paying dividends, and tax efficiency, perhaps toward becoming a REIT. Either or both of those actions could reposition the company into the mainstream of publicly-traded real estate. The shares are down 38% from their 2015 high. By our calculations, they are likely worth easily twice the current price”, said Horizon in the aforementioned letter to investors. Meanwhile, shares of Howard Hughes are down 9% so far in 2016. Bill Ackman’s Pershing Square was the owner of 3.57 million shares of Howard Hughes Corp (NYSE:HHC) at the end of 2015.

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