The Fund That Can't Be Stopped — And The Stock That's Driving Its 165% Returns This Year

Bernard Weil/Toronto Star/Getty Images

• Peter Doyle's Kinetic Paradigm Fund has risen 39% in November, leading all funds.
• The fund's success is driven by a 65% stake in Texas Pacific Land Trust.
• Doyle is BI's Investor of the Month for November after also receiving the accolade in October.

For the second consecutive month, Peter Doyle of Horizon Kinetics is BI's Investor of the Month.

And it wasn't even close.

After his Kinetic Paradigm Fund (WWNPX) returned 24% in October alone, one might have thought that would be a difficult act to follow.

But Doyle has not only repeated the performance — he's well-exceeded it. The fund is up 39% so far in November, bringing its year-to-date returns to 165%. The next-closest fund was the Morgan Stanley Institutional Inception Fund (MSSLX), up 25% so far on the month, according to data from Lipper and Dow Jones.

The secret to WWNPX's success is its high concentration in one stock: Texas Pacific Land (TPL). It has a 65% weighting in the fund and is up 201% this year.

TPL is a company that owns a lot of land in west Texas, and earns royalties from oil firms looking to drill on it. The land is also becoming a hotspot for new data centers being used to build out artificial intelligence capacity, partly due to low energy costs in the area. The firm earns royalties leasing out land for the data centers as well.

"They own very valuable real estate, and I know that that real estate is basically not going anywhere. And I know that people want to build AI data centers, and I know that that's the most logical place for that to happen in a very significant way," Doyle told BI last month.

He added: "If 100% of my net worth were in TPL, I would be sleeping very well. That's how good I think it is."

Markets Insider

The next largest holding in WWNPX is the Grayscale Bitcoin Trust (BTC) at 8.8%.

Doyle's fund hasn't outperformed only recently. Over the last five years it's up 283%. In the last 15 years, it's returned 729%. The S&P 500, for comparison, is up 90% and 448% over those respective timespans.

TPL has also led other funds that Doyle manages to outperform. It's by far the biggest holding in the Kinetic Market Opportunities Fund (KMKNX) and the Small Cap Opportunities Fund (KSCYX), both of which are up more than 120% year-to-date.

While high concentration levels can lead to impressive performance for a fund, it can also make it vulnerable to drawdowns if that single stock starts to underperform. Time will tell how long Doyle's impressive run with TPL can keep going. He said that a big reason for the high concentration is TPL's huge run up, despite his efforts to trim the position.

Criteria for investor of the month include: those who are managers of mutual funds or ETFs that are listed in the US; those whose fund has outperformed peers in a given month; and those whose fund is outperforming a benchmark index (in most cases this will be the S&P 500) on a trailing 12-month basis. Leveraged funds are not considered.