American Farmland Company - Ag Land As A Financial Instrument

[jeff9366]

LINK to AFCO Article on Seeking Alpha:
American Farmland Is Poised For Value Creation - American Farmland Company (NYSEMKT:AFCO) | Seeking Alpha

I thought article quite interesting. I did not know such things existed.

 

[California]

LINK to AFCO Article on Seeking Alpha:
American Farmland Is Poised For Value Creation - American Farmland Company (NYSEMKT:AFCO) | Seeking Alpha

I thought article quite interesting. I did not know such things existed.

Interesting.

The Bottom Line

AFCO's business model solves the problem of illiquidity and lack of diversification inherent to permanent cropland ownership. In doing so, it has the potential to create tremendous value for its shareholders. Its deep discount to NAV presents a great opportunity to buy into what could become an enormously successful farmland REIT industry.

Disclosure: 2nd Market Capital and its affiliated accounts are long AFCO, FPI and LAND. I am personally long AFCO, FPI and LAND. This article is for informational purposes only. It is not a recommendation to buy or sell any security, and is strictly the opinion of the writer.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

I wonder if this is similar to Romney's Bain Capital, structured so that the investment managers make most of the increase in value as the underlying assets shift from illiquid and underpriced, to fully priced, as their portfolio of properties is re-structured and sold as marketable securities.

Not emphasized in the article is what we are seeing here in California - companies of international stature are buying up farmland for its water rights. And in some cases planting new water-thirsty crops such as almonds as a strategy to justify use of all the water that the farm's grandfathered water rights allows. Nestle is one example, another is the water rights were sold to a local investor in the Davis (UC Ag campus) region so that now water for city of Davis has to be purchased from the water rights holder. In the future he can charge whatever he wants, there's no alternative source that isn't already fully allocated to other property owners.

If this drought continues, water rights will make fortunes for some landowners.