In value investing, it usually seems as though your portfolio is taking two steps forward and one step back. Buying somewhat distressed, under-followed asset plays and/or names that you believe are on the cusp of getting their act together can make for a lot of moving parts that rarely move in the same direction. That isn't necessarily a bad thing, but it does mean that when the broad markets are moving higher, some of your value-oriented names may be taking a different tack.
The path of REIT Farmland Partners (FPI) , which recently closed its merger with American Farmland, has been a bit rocky post-merger and shares are down about 10% year to date. First-quarter results were a bit murky, and fear that the company's funds from operations will not be able to cover its current dividend this year (5.36%) have been an impediment recently. Part of this concern may be driven by the merger itself and resulting confusion about the fundamentals, given the transition, merger-related costs and lack of transparency on how the combined entity will perform. A dividend cut is always a possibility, although I don't believe it will be necessary here, and am happy to maintain the current position while reinvesting the dividend.
Meanwhile, former net/net CPI Aerostructures (CVU) -- former because its recent price rise has lifted it out of net/net status -- has been on a tear the past month, up nearly 60%. That is due to the combination of a first-quarter earnings report that was much better than expected, the announcement of some new contracts, and perhaps some renewed interest among investors. Despite that recent rise, shares still trade at just 1.23x net current asset value, 1.14x tangible book value and 11x 2018 consensus earnings estimates. CPI Aerostructures will be presenting at next week's Drexel Hamilton Aerospace & Defense Conference in New York, which hopefully will raise the company's profile.
Meanwhile, off-the-radar agribusiness name Limoneira (LMNR) was up 6% during regular trading and another 4% after-hours after reporting better than expected second-quarter results. The company exceeded expectations on both revenue ($36.9 million versus $33.7 million) and earnings (24 cents a share versus 18 cents). Lemon sales were up 26% versus the same quarter last year. The company also raised earnings guidance for 2017 from a range of 48 cents to 52 cents to a range of 51 cents to 55 cents. In addition, Limoneira increased its citrus business footprint with the closing of its acquisition of Chilean company PDA, which includes 210 acres of lemons and orange orchards. This remains an asset play with its land and water rights and is valued as such, but it is nice to see earnings heading higher.
