Chadd Garcia drills into LandBridge's value

Chad Garcia dives deep into LandBridge, a land-based royalty company in the Permian Basin that’s poised to benefit from massive growth in water management, data centers, and infrastructure. Despite trading at a seemingly high 22–30x EBITDA, Garcia argues the market is underpricing the company’s true value due to a lack of understanding of its business model and optionality. LandBridge’s core strength lies in its vast, underutilized pore space—over 7.5 million barrels per day of incremental capacity—earning 15 cents per barrel in royalty income with zero incremental cost. This alone could drive 25% compound annual free cash flow growth over five years, even without data center upside. Garcia highlights a 150% year-over-year free cash flow increase from a 2024 acquisition, demonstrating active land management as a key value driver. He also unpacks the complex corporate structure involving WaterBridge and PowerBridge, arguing that while it appears like financial engineering, the separate entities serve distinct LP interests and conflict committees ensure fairness. The data center thesis—backed by major players like Chevron, Microsoft, and Eric Schmidt’s Bolt—remains a high-conviction, long-term tailwind. Finally, Garcia reflects on the recent GFL acquisition of Secure, which validated his thesis that it’s a waste management play, not an energy play, though he personally finds the multiple too low.