2 Land Plays That Insiders Are Buying

Land is the only thing in the world that amounts to anything.― Margaret Mitchell, Gone with the Wind My regular readers know I have been discussing the great migration out of high-tax cities such as New York City as an investment theme for over a year now. Recently, I have added another emerging theme I see in the quarters and years ahead; it is rising inflation as the new administration and the Federal Reserve have turned on the spigots in ways never seen before in response to -- and, in my view, in complete overreaction to -- the COVID-19 pandemic. Both trends should make land an even more valuable commodity in the years ahead, especially if it is situated in the right places. I'm going to highlight a couple land plays I have added to my personal portfolio over the last week. Both names recently have seen some large insider buying as well. Let's start with Green Brick Partners . I have been lightening my exposure to home builders for the past six months after big rallies in most of my names throughout a good part of 2020. Rising costs for lumber, labor and copper are impacting margins and mortgage rates have been moving up recently as well. However, I just added Green Brick to my portfolio as the first new home builder I have bought in some time. Green Brick is building homes in regions people are moving to in droves, including Dallas and Atlanta. Green Brick also has one of the highest growth margins and lowest leverage rates in the industry. Two Green Brick directors added nearly $650,000 of new shares in March, the first insider buying in the name in a year. Green Brick is seeing solid and revenue growth and goes for about 8x expected 2021 earnings. The stock has spent most of the past six months consolidating gains. I hope insider buying means the shares are ready to move higher. Also seeing its first insider buying in a year is Limoneira Co. as a director added just over $1 million of new shares via numerous transactions from March 16 through March 23. Limoneira is one of the largest lemon producers in the country, as its name implies. It also has a growing avocado operation. Both operations were hit significantly by the pandemic but should benefit as normality returns and prices for lemons and avocados increase. More importantly, Limoneira is starting to monetize some of its noncore land holdings in California and Arizona. Its first such endeavor is Harvest at Limoneira, a residential and commercial real estate project encompassing 550 acres with entitlements to construct about 1,500 single- and multi-family units. Limoneira has entered into a partnership with a developer (Lewis Group), from which it received $20 million upfront. The partnership has contracted with Lennar and KB Home to build residential units and had closed on lot sales representing 398 units as of Jan. 31, 2021. Limoneira anticipates receiving partnership disbursements from this project totaling $80 million from fiscal years 2022 through 2026. It also owns a 30-acre adjacent lot on which it is contemplating the development of a medical campus as well as excess water rights it eventually could monetize. Given Limoneira's revenue from lemons and avocados in 2020 was about $165 million and the stock sports a market capitalization of just north of $300 million, these seem valuable and unappreciated assets.

2 Land Plays That Insiders Are Buying

Green Brick Partners and Limoneira Co. offer reasons to buy their shares beyond the recent insider purchases of stock.

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