Wedgewood Partners: “Texas Pacific Land Trust (TPL) is the Best Business Most Investors Have Never Heard Of”

Wedgewood Partners, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. For calendar 2021, a portfolio net return of +32.1% was recorded by the fund, outperforming the S&P 500 Index that delivered a +28.7% return for the same period, and the +27.6% gain of the Russell 1000 Growth Index. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Wedgewood Partners, in its Q4 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 an $8.2 billion market capitalization. TPL delivered a -15.17% return since the beginning of the year, while its 12-month returns are up by 25.48%. The stock closed at $1,059.46 per share on January 19, 2022.

Here is what Wedgewood Partners has to say about Texas Pacific Land Corporation in its Q4 2021 investor letter:

Texas Pacific Land Trust is the best business most investors have never heard of. The Company has a storied history as a railroad operator, but not so rich a history of railroad profits. Today, the Company is an exceedingly profitable, fast-growing, uniquely diversified royalty operation; in arguably the lowest-cost oil basin (Permian Basin) outside of the Middle East oilfields. The Texas Pacific Railroad Company was created by federal charter (and Texas state charter) in 1871 to build a railroad from the eastern border of Texas in the town of Marshall (near Shreveport, Louisiana) to San Diego, California. The Company’s charters were issued at the tail end of the speculative railroad boom after the Civil War. This boom was largely financed with debt issued to European banks and investors. The failure of Jay Cooke & Co. in September 1873 triggered the (first) Great Depression throughout the U.S. and Europe.

Railroad construction literally came to a grinding halt all over the U.S. By 1876, the Company had only laid 444 miles of track and just 972 miles of track by 1886. Such lack of development triggered losses of chartered land. As if such troubles weren’t enough for the Company to deal with, hurricane-induced flooding in 1886 and 1887 and crop failures due to drought at the same time drove the final railroad spike in the Texas and Pacific. By 1888, the Company filed for bankruptcy. The bond holders received the 3.5 million acres of granted land in Texas. Stock certificates of trust were issued to the debtors and would later be traded on the New York Stock Exchange. The mineral estate was bought by Texaco (now Chevron). The Company owns a royalty interest in 500,000 acres of this land as well…” (Click here to see the full text)

create jobs 51/

Our calculations show that Texas Pacific Land Corporation (NYSE: TPL) failed to obtain a mark on 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. delivered a -16.64% return in the past 3 months.

In December 2021, we also shared another hedge fund’s views on TPL in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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