Texas Pacific Land Corporation (TPL)

[Enterprising Investor]

The only risk is that TPL could end up like Temple-Inland after Carl Icahn became a "concerned shareholder".

I owned Temple-Inland back in 2007. The purchase had nothing to do with the rest of the story that I am about to explain. I have spent most of my professional life in financial services. Cash flow from timber land can be pretty stable. Excess funds could be used elsewhere in case of a rainy day. I saw the writing on the wall for global banking. I made a great deal of money investing in banks after the bottom.

Icahn, who owned 8 percent of the company, urged the board to sell off assets.

Campbell Group paid $2.38 billion for 1.55 million acres - about $1,535 per acre. As a result of the sale, shareholders received a $1.1 billion dividend. And the Treasury got to a double-dip cone. Fast-forward to 2018, CatchMark Timber Trust Inc. and its partners actually paid $1,264 per acre for this same land. It was a distressed sale due to overharvesting.

In November 2007, Temple-Inland announced that it planned to separate itself into three stand-alone public companies and sell its timberlands by the end of 2007. Shareholders in the company would eventually receive stock in all three companies depending on the amount owned on the day the company split-up.

The three companies were:

Temple-Inland Inc.

Temple-Inland Inc. became a manufacturing company focused on corrugated packaging and building products. The vertically integrated corrugated packaging operation consisted of five linerboard mills, one corrugated medium mill and sixty-four converting facilities. The mills produced 3.5 million tons of containerboard per year and the converting facilities produced 3.6 million tons of corrugated packaging per year. The building products operations manufactured a variety of building products for new home construction, commercial and repair and remodeling markets. International Paper acquired Temple-Inland in 2012.

Guaranty Financial Group Inc.

Guaranty Financial Group Inc. became a financial services holding company operating a federally chartered savings bank with total assets in excess of $16 billion through a network of approximately 150 bank branches located in Texas and California. Bankers love to hook up branches in these two states. In August 2009, Guaranty Bank was closed by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC sold all of the deposits of Guaranty Bank to BBVA Compass of Birmingham, Alabama. At the time of its collapse, the bank had 103 branches in Texas and 59 branches in California. Monetizing the land later on might have just saved the bank from failure and the FDIC insurance fund from losses. Or maybe not.

Forestar Real Estate Group Inc.

Forestar Real Estate Group Inc. became a dual business operating company focusing in two business segments: real estate and natural resources. The real estate segment owned directly or through ventures about 374,000 acres of real estate located in nine states and twelve markets in the U.S. The real estate segment had 24 real estate projects representing about 27,000 acres in the entitlement process and 75 active development projects in seven states and 11 markets encompassing approximately 17,000 acres. These are 30,000 residential lots and 1,900 commercial acres. The natural resources segment managed about 622,000 net acres of oil and gas mineral interests, sells wood fiber from its land primarily located in Georgia, and leases land for recreational uses.

It should be noted that both sides are being very aggressive towards each other.

I am not selling...