A Tontine!

                        A Tontine

is an investment plan for raising capital, devised in the 17th century and relatively widespread in the 18th and 19th centuries. It combines features of a group annuity and a lottery. Each subscriber pays an agreed sum into the fund, and thereafter receives an annuity. As members die, their shares devolve to the other participants, and so the value of each annuity increases.

It sounds gruesome, but essentially, it is a liquidating trust with no-or-few expenses.    See a 1995 report on the TPL trust that turned out to be prescient.

Texas Pacific Land Trust TPL CRR May95

TPL Annual Report 2016  Go to last page to see acreage map. Use Google Earth to go view the terrain, then search for oil and gas activity in the area(s)

More annual reports: http://www.tpltrust.com/annual-reports.html

Texas Pacific Land Trust discussion

MAP: http://www.tpltrust.com/fullmap.html

Part of my search strategy is to look for the quirky, weird stuff.


“The one who follows the crowd will usually get no further than the crowd. The one who walks alone, is likely to find himself in places no one has ever been.” — Albert Einstein

What do YOU think?

PS: Weekend Reading

OMC_Omnicom_Singular_Diligence   I wish for more brevity!


5 responses to “A Tontine!

  1. Interesting case. The analysis from 1995 was spot-on.
    H0w would you value it today? It seems very complicated.
    My thoughts are that the trust could run forever, couldn’t it? And with such a low dividend it may not turn out to be a great investment. It’s completely in the control of the trustees.
    The income it produces is low in comparison to its market value.

    In your discussion it states that the trust has a mandate to use its cash flow for repurchases? I looked for the original deed but couldn’t find it. What about dividends?

    If true that it is mandated, I think that the stock really is tricky to value. The higher the price moves, the lower the percentage of buybacks that is possible. And if the dividend stays low, who is going to be willing to pay much more for a company that is likely to take 100s of years to buy back all its stocks?

  2. There is widespread opinion that TIAA’s College Retirement Equities Fund (CREF) has in many ways been running a tontine since 1952

  3. I’m currently reading Schiller’s Special Situations from 1966 and thought about this. In chapter 8 he is listing some companies that might be candidates for liquidation or m&a. This company was listed:
    TEXAS PACIFIC LAND TRUST is often rumored as a potential liquidation or sell out.

    • yes, TPL has been around a long time. I have owned for a while, but I did peel off a few shares last week to set aside. Nothing wrong with TPL, but we all have living expense.

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