What a difference a year makes. Around this time last year, select small agriculture names were on fire, as the S&P 500 was down double digits.
One year later, the S&P is up 10% year-to-date, while some agriculture names are under water relative to the markets, no pun intended.
Florida citrus company Alico, Inc. (ALCO) (flat) was trading in the $40 range this time last year, but in September, Hurricane Ian got in the way, and production is still down. The company did receive $13.7 million in crop insurance through the end of April, but second-quarter results were not pretty, and the company lost $1.02 per share, and revenue was down 57% year over year.
Falling orange prices have not helped. The average price/pound for FY 2022 (September) was $5.28, down from $5.66 in 2021 and $5.96 in 2022. The value in ALCO is the land, the company owns 48,867 citrus acres, or just over 76 square miles -- 35,295 acres (or 55 square miles) are plantable. There's an additional 24,687 acres of ranch land, for total company acreage of 73,554 (115 square miles).
ALCO ended its latest quarter with $118 million in net debt, and an enterprise value of $300 million. That equates to $4,078 on an EV/acres basis, a homegrown calculation I sometimes use when evaluating companies that own land.
Argentine farming company Cresud (CRESY) (up 4%) enjoyed a great 2022, rising about 40%. CRESY is the epitome of volatility, operating in a country where inflation runs rampant, and the government is not exactly pro-business. This is a sum-of-the-parts story, but not one for the faint of heart.
Cresud owns about 1.3 million acres of farmland, plus a 39% stake BrasilAgro and 53% stake in real estate company IRSA (IRS) , among other things. I've owned this one a few times over the years; despite a strong pool of assets, there is also significant debt. It has traded in a wide range over the years, and I've tended to try and buy it on the cheap, and sell after a run-up.
California farming giant J.G. Boswell (BWEL) remains quite a mystery, but has had an awful 2023 (down 23%) due to flooding in the Tulare Lake basin in California, where the company owns 150,000 acres (234 square miles) and grows cotton, tomatoes, pistachios, and other crops. The last big flood in that area occurred back in 1983, and the current one has scared off some investors.
It has long been speculated that J.G. Boswell is worth many times its current price due to the ownership of water rights, but there's never been an indication that it wants to sell. In recent years, BWEL has sold off its Australian cotton land, and its stake in the Phytogen seed company (to Corteva), shoring up its balance sheet.
Fundamental data is difficult to come by for BWEL, which is not required to file financials with the SEC but does provide annual reports to shareholders only. I estimate that BWEL's EV/acres calculation is in the $4,300 range. The shares currently yield 3%.
Sooner or later, the flood waters will recede. Meanwhile, it was been reported in early April that BWEL was moving ahead in planting tomatoes where it could, and would follow up with cotton when appropriate.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider ALCO to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)
