Very quietly, and with little fanfare, agriculture name and long-time holding Limoneira (LMNR) is now trading at an 11 year high. The epitome of the long-term deep value holding, owning LMNR has at times been about as exciting as watching grass grow or paint dry. But that has changed over the past several months, and at times it seemed to not always be in positive ways.
After the market closed on June 20th, when shares closed the day at $26.70 range, and were up 20% year to date at the time, the company announced a $50 million stock offering, with shares expected to price in the $22-$22.50 range. Talk about a way to suck the life out of a stock; do a secondary and price it 17% below the current price, and in fact, post market trading that day pushed shares down to about $23. It did not take long, however, before we learned the reasons for the capital raise.
Shares bounced back nicely the next day when the company announced the acquisition of Fruitcola San Pablo S.A. in Chile for $13 million. The assets acquired included 3317 acres of land; 247 currently producing lemons, 61 acres producing oranges, and the potential for 500 acres of avocados. The acquisition was expected to be almost immediately accretive, adding 2- 3 cents per share in earnings for 2018, and 6 to 8 cents the next year.
Just over a month later, the company announced the acquisition of a packinghouse and related assets of Oxnard Lemon Company, with packing capacity of 4 million cartons per year. Adjacent to LMNR's headquarters, the move nearly doubles the company's storage space, and is expected to add 8 to 10 cents in earnings for 2019.
Already a leading provider of lemons, these moves could strengthen the company's position in the citrus industry. With lemon prices soaring above $50 per carton, and going as high as $70 in July due to the California heat wave, LMNR is benefitting.
But make no mistake, there is much more to the company besides citrus. One of the major assets that attracted me to the stock when it was still traded on the pink sheets, and before it listed on NASDAQ in 2010, was the company's water rights. These include 8,600 acre feet of adjudicated water rights in the Santa Paula Basin Always.
With the recent acquisitions, LMNR now owns about 14,000 acres of land, or nearly 22 square miles. This includes nearly 5000 acres devoted to lemons, 1000 to avocados, 1400 to oranges, and 900 to specialty crops. LMNR also owns 300,000 shares of Avocado name Calavo Growers CVGW, currently worth about $29 million or about $1.70 per LMNR share.
It is nice to see LMNR finally bearing some fruit, pun intended. It's an enticing package of assets with a rather small $524 million market cap.