The farmland/agricultural land sector has been heating up in the wake of last month's report that Bill Gates has been snapping up acres upon acres. Always interesting as an asset class, direct exposure in the publicly traded markets has been possible, and at times profitable, and I've owned several names in the space over the years.
Recently, farmland REIT Farmland Partners (FPI) , which owns 156,500 acres in 16 states, has finally broken out, likely aided by the Gates story. Farmland Partners has more than doubled since November and is trading near an-all-time high since its 2014 initial public offering (IPO). I gave up on this name back in 2018; the 2017 merger with American Farmland had not panned out as I thought it might, and I moved on. I don't know if Farmland Partners has more room to run from here, but for a REIT the yield at 1.5% is on the low side. The company cut the 12.8-cent quarterly dividend in 2018 to the current five-cent rate.
Gladstone Land (GLAD) , another farmland REIT that owns 127 farms comprised of 94,000 acres, has also popped recently and trades at an all-time high. GLAD currently yields 2.91%. Gladstone is the only name on this page that I've never owned. However, I've soured on the idea of farmland exposure through REITs following my Farmland Partners experience.
The ever-mysterious JG Boswell (BWEL) , which owns an estimated 150,000 acres in California (cotton, tomatoes and other crops) and additional acreage in Australia, has also seen positive action lately and is trading near a five-year high. Shares fell below $500 at the outset of the pandemic and closed Tuesday at $697.
JG Boswell sold its stake in Phytogen, a joint venture with Corteva (CTVA) , to that company last June for $60 million. In late 2019, it began selling off Australian assets and has the rest up for sale. With all the divestitures, the big question is whether JG Boswell will part ways with its legendary California water assets. I am not holding my breath after purchasing my first BWEL shares in 2003. Still, this is an interesting potential asset play, with a minute $683 million market cap and $813 million enterprise value.
Argentine farming name Cresud (CRESY) , which owns vast amounts of farmland in Argentina, Brazil, Paraguay and Bolivia as well as parts of a few publicly traded companies, has had a rocky road given its location and currency. Cresud shares are up more than 50% since September, but have suffered greatly over the past three years. I've owned this stock on and off for several years; while it is a compelling way to get exposure to international farmland, Cresud also has significant debt and there is political fallout exposure given the ever-changing nature of Argentina's government and its attitude toward private enterprise and capitalism.
Performance has been mixed for citrus-related names. Limoneira (LMNR) , which owns 15,400 acres primarily in California and primarily grows lemons and orange, but also has 900 acres devoted to avocados, has had a decent run recently but has not recovered to pre-COVID levels. I owned this name for several years before closing the position in late 2019. LMNR trades at about 28x next year's earnings estimates; just one analyst covers it.
Florida's Alico (ALCO) , which owns slightly less than 100,000 acres, with 46,000 devoted to citrus and the rest ranch land, has not participated in the agriculture rally, trading sideways for the past year. Citrus "greening" has been an issue, and Florida's citrus production has been declining while citrus prices have been rising.
The U.S. Department of Agriculture in January said it expects the Florida orange crop to decrease 19.8% this year. ALCO currently trades at 1.06x tangible book value per share and 15x next year's earnings estimates (again, with just one analyst covering it). Surprise, surprise: I've owned this one in the past, too, but have not yet developed the appetite to take a new position. Ironically, though, I have recently developed a huge appetite for fresh-squeezed orange juice and can attest to the fact that oranges ain't cheap these days. I can't tell you how many dollars of oranges I've put through my cheap and rather noisy juicer. Perhaps if ALCO paid its 18-cent quarterly dividend-which it recently doubled from the prior nine cents-in Florida oranges in lieu of cash, I'd be inclined to take a position.
