• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

I May Take Another Run at Limoneria

This is not based on the pipe dream of water asset/land monetization, but whether shares get cheap enough as an operating company.
By JONATHAN HELLER
Aug 25, 2021 | 11:05 AM EDT
Stocks quotes in this article: LMNR

An old name popped up on my radar yesterday, California citrus company Limoneira (LMNR) . I'd parted ways with the stock back in late 2019 in the mid-$18 range after owning it for several years, and had not looked back. I just re-read that column, and chuckled at my reasoning for selling: it was out of "sheer boredom". That's quite a statement for a value investor, we tend to be extremely patient by nature, but there are limits. In LMNR's case, the company has had a mini-cult following among deep value investors over the years, those who have seen a potential big payday for the company's water rights and land holdings.

What caught my eye Tuesday was LMNR's preliminary third quarter results, and the market's reaction. The company reported preliminary revenue of $49 million, down 8.6% year/year, but more importantly, below consensus estimates of $57.7 million. Consensus earnings estimates for the quarter are 39 cents, and it's pretty clear that the company will miss that mark when it reports final Q3 results. The company reported that sales of lemons fell from 1.4 million cartons last year to 1.1 million. Shares fell 3% in the regular trading session, and were down 10% after hours.

At year-end, LMNR owned 13,800 acres (that's about 21.5 square miles). Included in those land holdings were 6,000 acres of lemons, 1400 acres of oranges, 900 acres of avocados, and 900 acres of specialty citrus and other crops. The company is in the process of monetizing its Harvest at Limoneira real estate project, and has closed on a total of 556 lots, including 92 in the third quarter. The company expects to reap $80 million in distributions from the project over a six-year period beginning in 2022.

Total California water rights are approximately 17,000 acre-feet, including 8600 acre-feet of adjudicated rights in the Santa Paula Basin and Fillmore Basin. In Yuma, Arizona, the company has access to 11,700 acre-feet of water from the Colorado River.

Owning LMNR when I did was a bit like watching paint dry, or the grass grow. I came to the conclusion that on paper it was potentially worth a great deal more than the share price. But that's the trap that we deep value investors sometimes fall into. In order for the "value" to be realized, assets need to be monetized. That can take a long time, if it ever happens. I don't mind having a few names in the portfolio that fit that MO, but have become more cognizant of the realities, and having too much capital tied up in these situations.

When I see a name like LMNR take it on the chin, I do wonder about re-engaging. However, this is not based on the pipe dream of water asset/land monetization, but whether shares get cheap enough as an operating company. If the market overreacts to the downside - and that's in the eye of the beholder - I'd be inclined to consider taking another run.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jonathan Heller had no position in the securities mentioned.

TAGS: Real Estate | Investing | Stocks | Trading | Agriculture

More from Investing

What Do Politicians and Sentiment Have in Common? (They Both Flip-flop)

Helene Meisler
Jun 30, 2022 6:00 AM EDT

The market is falling victim to shorter, smaller rallies -- and lots of chop. But here's why we're getting closer to overbought. Also, let's check on some gas and diesel.

Market Looks Good from Above, Poor From Below

James "Rev Shark" DePorre
Jun 29, 2022 4:21 PM EDT

The major indexes held up well, but underneath, it wasn't pretty.

This FAANG Stock's Technicals Are at a Summer Crossroads

Bob Lang
Jun 29, 2022 3:30 PM EDT

Summer is a time when this name usually gains momentum. Will it this time?

Kass: Untapped Homeowners Equity and Imbedded Gains Will Be a Ballast to Growth

Doug Kass
Jun 29, 2022 3:00 PM EDT

Homeowners equity has more than tripled in the last decade.

Can Pinterest Poke Through the Charts and Rally?

Bruce Kamich
Jun 29, 2022 2:48 PM EDT

With a CEO change in the mix, shares hit, and a social media under watch, let's see whether PINS could move the needle.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login