Solid Financial Profile but Caution on Management's Growth Push

about 2 months ago

Dan

"I gave it 5 to 10% returns in line with my market call, but a safety score of six. A little bit lower than where I usually would go. And I think that here the concern I have, there's a real danger that management might kind of get out in front of its skis and try to push growth where really growth might not be available. And it's easy for management teams to get greedy, especially when the share price does things that we've seen. We've seen that stock down almost 50% from its highs earlier this year. I'm actually glad to see that. I think it builds a little bit more of a margin of safety for folks who are looking to invest now. But just be keep your eyes on management and the culture because you want to make sure that they don't ruin what has been a lovely cash cow for well over a century at this point."

The speaker highlights Texas Pacific Land Corporation's ability to generate 5-10% returns with strong financial fundamentals, but warns that management's potential overreach in pursuing growth could jeopardize its long-term stability. The recent 50% decline in stock price has built a margin of safety, yet the risk remains if the company's leadership pushes too aggressively.

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