I've long been enamored with real estate, especially situations where publicly traded names own land or, if they are in the retail space, their stores. I've soured a bit on the latter, given what appears to be a glut of commercial space. Situations such as Sears (SHLDQ) , where several years ago the value crowd became overly excited about the "value" inherent in Sears' owned buildings, were a wake-up call. Fortunately, I was not a believer in the Sears value story, nor the J.C. Penney (JCP) real estate fantasy.
However, I have fallen into the real estate value trap a time or two, most recently with Ruby Tuesday, which I believed would be acquired. Indeed it was ultimately taken out but not at a great price. Within retail/restaurants, struggling brands won't command premium prices, even when there is significant real estate involved. I still believe that a name such as Cracker Barrel (CBRL) is different. The company is thriving, and owns 420 of its 667 locations, and they tend to be in higher quality locations.
Agricultural and raw land still remain a favorite, although it is not as hot as it was a few years back, and my views have changed over the years. I've also eliminated some names that seemed to be of great value theoretically but lacked a catalyst or prospects of monetization. One exception is California cotton/farming name JG Boswell (BWEL) , a position I've been building since 2003. That has been about as exciting as watching paint dry, but the "hidden" asset there is company water rights. Value here has been given great speculation over the years, but with no monetization on the horizon the buzz has died down. I am happy to collect the dividend for now.
I owned California citrus name Limoneira (LMNR) for several years, but recently closed the position out of sheer boredom. Names such as Tejon Ranch (TRC) , which owns 270,000 acres in California, an area the equivalent of 422 square miles, used to fascinate me. On paper, it has always likely been worth well in excess of its price, but again, there has been little to no monetization. I took a position in TRC in the early 2000's, and finally closed it several years ago, worn down by the realization that true value might never be realized. I had not looked at it for quite a while, and was shocked to see it now trades in the $16 range, back to 1997 prices, and about half of my sale price.
I'd owned farming REIT Farmland Partners (FPI) for a few years, but closed that position in 2018 when the company ran into some controversy and I have not looked back. Sometimes I do look back, however, and recently began rebuilding a stake in Argentine farming/real estate name Cresud (CRESY) . Perhaps I should have my head examined for this move, but sometimes it pays to buy when there's blood in the streets, and I think that is already priced in.
I am also in the process of taking another look at an agricultural name I owned a while back, due to a potentially interesting turn of events. I plan to reveal that name in an upcoming column.
