Top 5 Stock Picks of Murray Stahl’s Horizon Asset Management

01. Texas Pacific Land Corporation (NYSE:TPL)

Horizon Asset Management’s Stake Value: $2,240.474 million

Number of Hedge Fund Holders as of Q1 2022:  19

Texas Pacific Land Corporation (NYSE:TPL) was founded in 1888 and is headquartered in Dallas, Texas. It engages in land and resource management, water services, and operations businesses. The company’s Land and Resource Management segment manages approximately 880,000 acres of land.

On August 3, Texas Pacific Land Corporation (NYSE:TPL) reported quarterly earnings of $15.37 per share, missing the EPS GAAP actual estimate by $0.08 per share. This contrasts with earnings per share of $7.36 in the prior year. Texas Pacific Land Corporation (NYSE:TPL) shares have added about 33.16% since the beginning of the year versus the S&P 500’s decline of 10.77%. The stock comprises 47% of Horizon Asset Management’s portfolio.

In its Q2 2022 investor letter, LRT Capital Management mentioned Texas Pacific Land Corporation (NYSE:TPL) and explained its insights for the company. Here is what the fund said:

“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, 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 (NYSE:TPL), meets that criterion. 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.”

You can also look at the 7 Best Stocks to Buy According to Stephen Feinberg’s Cerberus Capital Management and 10 Stocks You Should Sell in 2022 According to Billionaire Dan Loeb.

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