Goldman Sachs’ Top Fund Manager Stock Picks: 25 Best Overweight Stocks

19. Texas Pacific Land Corporation (NYSE:TPL)

Number of Hedge Fund Holders In Q2 2024: 21

Overweight Percentage: 0.10%

Texas Pacific Land Corporation (NYSE:TPL) is an oil royalty company based in Texas. The firm has ownership in oil producing land in West Texas. Its business model, which relies primarily on royalty payments as opposed to extracting oil means that Texas Pacific Land Corporation (NYSE:TPL) benefits from a margin heavy business. The company’s trailing twelve month operating margin is 79%, indicating the vast sums of money that are available to management to distribute among shareholders. Texas Pacific Land Corporation (NYSE:TPL)’s annual dividend yield is currently 0.53%. On the flip side, since it has significant exposure to the oil industry, and the only way to grow is by acquiring more land or raising existing royalties, Texas Pacific Land Corporation (NYSE:TPL)’s shares are also troubled when the US oil industry isn’t performing well or when prices are low. Consequently, if we exclude the 33.5% share price jump in June when the firm was added to the S&P midcap index, Texas Pacific Land Corporation (NYSE:TPL)’s stock is up by just 8.8% year to date on the back of weaker oil prices. The post S&P jump might also mean that valuations are stretched and the stock has limited room to grow further.

Scout Investments mentioned Texas Pacific Land Corporation (NYSE:TPL) in its Q2 2024 investor letter. Here is what the fund said:

“Texas Pacific Land Corp. rounds out the top five contributors. Standard & Poor’s announced in early June that the company will join the S&P MidCap 400® Index. Texas Pacific Land has relatively illiquid stock, so this announcement created significant buying pressure as traders sought to get ahead of index funds’ upcoming forced ownership. At the end of the quarter we maintained a small allocation to the company because we like the oil and gas mineral rights business model.”