2 Farm Names That Could Bear Fruit for the Patient Seed Planter

 | Feb 17, 2017 | 10:00 AM EST
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Stock quotes in this article:

fpi

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lmnr

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cresy

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irs

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lnd

Time sure flies. I was reviewing some older columns as I often do, and one in particular caught my eye, primarily because of the headline: "I Bought the Farm. Maybe You Should, Too."

Make no mistake; it's the crack editorial staff at Real Money that comes up with all the good headlines, at least for my columns. This was particularly funny to me as "buying the farm" is a euphemism for death, and when that column ran, I was on the precipice of a monumental birthday, one that signified more days in my past than in my future.

It has been an interesting year for the farm-related companies I highlighted in that piece (most of which I own). Although Farmland Partners (FPI) was the worst performer of the bunch, up just 9% over the past year, the company did undertake a merger with American Farmland, and the combined entity is now the largest publicly traded farmland REIT in the United States. Purchasing shares of American Farmland prior to the merger turned out to be a cheaper way to gain exposure to FPI, given the discount that was priced in to American Farmland shares. From here, I don't expect big things from FPI; it may be downright boring. However, I will continue to reinvest the 4.6% dividend, until yours truly is closer to "buying the farm."

It has been a decent 12 months for California citrus name Limoneira (LMNR) , which owns about 10,000 acres --the equivalent of 15.6 square miles. Besides the company's farming business, which grows lemons, oranges and other citrus products as well as olives and pistachios, the company is developing some of its land in Ventura County. Beyond the land, it was also Limoneira's ownership of valuable California water rights that led me to take a position several years ago. Shares are up about 45% over the past year, but have tumbled around 16% year to date. Investors expecting steady and growing earnings may want to look elsewhere. LMNR is the epitome of an asset play, which may or may not pan out in a time frame acceptable to most investors.

The big winner also has been the most volatile, and you would not expect anything less from Argentine farming play Cresud (CRESY) . I've owned this one on and off for years, and it has doubled since last February. Indeed, it is trading closed to an all-time high for the ADR, levels not seen since 2007, and close to where I closed my first position nearly 10 years ago.

This is a complicated company to understand and value, located in an area of the world not known for economic stability. One of the boosts to the name no doubt has been Argentina's more business-friendly environment since President Macri assumed power in December 2015. A seemingly decent earnings report issued on Monday did not hurt, either.

Beyond a massive farming operation, CRESY also owns significant stakes in Irsa Inversiones y Representaciones (IRS) , one of Argentina's leading real estate companies, and Brasilagro (LND) . Still, this is a complicated and sometimes controversial web of a company that deserves its own column, which I'll aim to deliver in the future.

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