Part I: Always Cry Over Spilt Milk
(An Admission of a Past Mistake on Resources)
Jeremy Grantham
Part II: Updates
Equity Markets
The tone of the market commentators back in January, when I was writing my last quarterly letter,
seemed much too pessimistic on global stock markets, particularly the U.S. market, and I said so.
This relative optimism was an unusual position for me and the snapback in these markets has validated,
to a modest degree, my thinking at the time. I still believe the following: 1) that we did not then, and
do not today, have the necessary conditions to say that today’s world has a bubble in any of the most
important asset classes; 2) that we are unlikely, given the beliefs and practices of the U.S. Fed, to end
this cycle without a bubble in the U.S. equity market or, perish the thought, in a repeat of the U.S.
housing bubble; 3) the threshold for a bubble level for the U.S. market is about 2300 on the S&P 500,
about 10% above current levels, and would normally require a substantially more bullish tone on the
part of both individual and institutional investors; 4) it continues to seem unlikely to me that this
current equity cycle will top out before the election and perhaps it will last considerably longer; and 5)
the U.S. housing market, although well below 2006 highs, is nonetheless approaching a one and onehalf-sigma
level based on its previous history.
https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdfPS
@Ted Don't sell the farm ! From the letter..
Farmland is likely to outperform most other assets. It is still my first choice for longterm
investing.
Comments
Regards,
Ted
Jeremy Grantham: Train Wreck Spotter:
http://www.cxoadvisory.com/3200/individual-gurus/jeremy-grantham/
http://www.zerohedge.com/news/2016-05-14/american-farmer-its-death-1000-knives”-us-farmland-values-plunge-most-30-years
https://www.chicagofed.org/~/media/publications/agletter/2015-2019/may-2016-pdf.pdf?la=en
Nonetheless, many of the TBTF banksters went into farmland in a big way in the mid-00s and bought up what they could (and, of course, "financialized/securitized" it), so I'd hesitate investing in anything publicly-traded because I'd be concerned I'd be encouraging the corporate farming trend and hastening the demise of a way of life I think is very important to preserve (not to mention the loss of local control and good environmental stewardship).
On the other hand, there are a number of farmers in the Midwest who are continuing to pool their needs into some rather substantial cooperative businesses, and I've seen several interesting preferred stock offerings, with good yields and very ample dvd coverage, if you wanted to invest for income with a margin of safety. However, I haven't pulled that string because it was my impression, the deeper I went in researching them, that they are very tightly-held, and one would have to put in many buy orders, over time, to ever get lucky and have one filled. Not my territory.... could be dead wrong about it. Anyone who knows something about how to buy stuff so off the beaten path, please take me to school!
Small farms owned and run by 20-to-40-somethings with local/regional distribution networks are one of the only things that's working well for the local economy in this neck of the woods. The local/regional approach includes networks like Farm to School, Farm to (restaurant) Table, and Farm to Food Bank, and locally owned grocers put locally grown produce and meat on their shelves. Outside investment/speculation isn't at all compatible with these sorts of productive and beneficial approaches.
NASDAQ:CRESY
NASDAQ:LMNR
OTCMKTS:BWEL
NASDAQ:ALCO
Income issue ideas.
CHSCO
NASDAQ:CHSCP
Also fertilizer companies and seed genetics although with more volatility.
I own and reinvest dividends in LAND, FPACX, OTCRX
Millennials spending is accelerating, new demands for healthier foods and using e-commerce
Calavo Growers (CVGW) MasterCard (MA)
http://www.ottercreekfunds.com/media/pdfs/OCL_Call_Presentation_1Q20161.pdf
LAND a real estate investment trust, or R E I T LAND
The geographic regions where our farms are located continues to experience steady appreciation
We currently own 23,456 acres on 47 farms in seven states in the United States. We also own some cooling facilities, packing houses, and processing facilities as well; there is several other structures on the farms. These are part of the farming operation on our farms.
We have a couple of different lease structures that we use for our tenants and we have been extremely successful in our leasing strategy. We've been able to average an average annual increase of over 16% on lease renewals over the past three years.
There are no new farms being developed in most of these areas because all of the arable land is currently being farmed or it has already been converted to other uses, such as housing, schools, or factories.
The trend that we are seeing is a steady decrease in a number of farms in our growing regions have been sold or converted to suburban uses. So California alone has been losing about 100,000 acres of farms per year. This has caused the farms that we own to be highly sought after and they have been rented for decades without ever being vacant.
https://finance.yahoo.com/news/edited-transcript-land-earnings-conference-174914965.html
Farmland Partners Inc:FPI
Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate
http://ir.farmlandpartners.com/file.aspx?iid=4426904&fid=33287632
FPACX owns 0.31% of assets here.Very small position in a $17 bil fund.
U.S. FARMING REALTY TRUST I, 0.07%
35,000,000 U.S. FARMING REALTY TRUST II, 0.24%
TOTAL LIMITED PARTNERSHIPS: 53,567,775.00 0.31%
The sponsor of those trusts offered another opportunity last year.Maybe they"ll put together another in the future . Save your money for the minimum! Probably only available to "accredited Investors"
Issuer
U.S. Farming
Realty Trust III,
LP
/s/ Charlie
McNairy
Charlie McNairy
Manager, International
Farming Corporation
GP3, LLC
2015-07-17
11. Minimum Investment
Minimum investment accepted from any outside investor
$ 1,300,000
http://b4utrade.brand.edgar-online.com/efxapi/EFX_dll/EDGARpro.dll?FetchFilingCONVPDF1?SessionID=CzTMe5a8UvZMR8Y&ID=10812508
With a glass of wine. American Farmland Company.AFCO
http://www.americanfarmlandcompany.com/portfolio.html
NY Times Business Day from 07/22/14
Cash Crops With Dividends
How a few sophisticated investors found a way to transform
strawberries into securities. Copyright © 2014 by The New York Times Comp
http://investors.americanfarmlandcompany.com/Cache/1001205369.PDF?O=PDF&T=&Y=&D=&FID=1001205369&iid=4589976
Not Always Wine and Roses
American Farmland Announces Review of Strategic Alternatives
Company Release - 4/14/2016 4:01 PM ET
NEW YORK--(BUSINESS WIRE)-- American Farmland Company (NYSE MKT:AFCO) (the “Company”), a specialized real estate investment trust focused on the ownership, acquisition, development and management of a portfolio of diversified, high-quality U.S. farmland, today announced that its Board of Directors has authorized the Company to commence a review of strategic alternatives to enhance shareholder value.
Since the Company’s October 19, 2015 initial public offering, its shares have consistently traded at a substantial discount to net asset value which, as of December 31, 2015, was estimated to be $10.05 per share. The Company’s net asset value is based upon independent third-party appraisals of its farms which were performed as of December 31, 2015. The Company has retained Citigroup Global Markets Inc. and Raymond James & Associates, Inc. as its financial advisors and Goodwin Procter LLP as legal counsel to assist in a comprehensive analysis of all potential strategic alternatives. Alternatives to be explored may include, among others, joint venture arrangements, a merger of the Company, or a sale of all or part of the Company and/or its assets
http://investors.americanfarmlandcompany.com/file/Index?KeyFile=33849746
Regards,
Ted