New buy today...Gladstone Land (LAND)

C

Cabin111

As I have shared before, I am an insomniac...I got up at 11:30 am California time today. Not much active trading I can do. I put in my order last night for LAND...$23.99., 200 shares. I picked it up for $23.94 this morning. I then did a covered call Feb 23 $25. I sold them for $2.06...I also grabbed the dividend coming up. It's not much, but extra income.

About 1/2 of LAND's property is in California (farmland). We are in the largest drought in hundreds of years. Big time water restrictions are coming.

This is a bit of a gamble/bet for me. I am betting that we will get normal rains this winter in California. It not, much of this ground will end up going fallow!! We'll see...
 
SunTrader said:
Do you ever have a target in mind in these purchases ... on the up and down side?
More...

On the upside, I am almost always willing to let them get called away. If I like certain stocks, I will just hold for the long term (no CCs)...Including a recession (examples; BG, ADM, Target, BP).

On the downside, I will usually let the option expire, then reevaluate the stock. I'll either do another option (covered call) or sell it. Selling it, I will generate a short term or long term capital loss...That can be used against my short/long term capital gains at tax time.

The second or third option on the stock (if it has dropped), will also create (usually), long term capital losses...

Many of those short and long term capital gains, are the other options that have been called away...

Come October/November I will reevaluate my long term and short term gains and losses. Try and create a better situation come tax time..."It's not what you make, it's what you keep".
 
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what did LAND do wrong that caused the price to drop massively in May 2022?

It will now hover around 22 and 27 for quite some time.

Will it break the 22 support level, and go down to 10?
 
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An interesting news article in BARRON's mentioning Farmland Partners Inc. (FPI) and Gladstone Land (LAND) and others:
"
Farmland Is an Inflation Hedge. How to Invest.
By Lauren Foster, Updated July 29, 2022 8:21 am ET / Original July 29, 2022 1:30 am ET

im-593392

Paul Pittman, chairman and CEO of Farmland Partners. Photograph by Evan Jenkins

At a time when stock prices are slumping and inflation is soaring, farmland looks to be an appealing investment. It is a real asset that performs well in inflationary environments, delivers stable returns over long holding periods, and exhibits low correlation to financial assets. What’s more, farmland prices stand to benefit from growing concerns about food and land scarcity.

U.S. farmland has posted an average annual return of 11.2% for the 25-year period that ended in March 2021, according to the advisory group at Green Street, a commercial real estate analytics firm. That compares with a 9.6% gain for the S&P 500 index in the same period. The S&P 500’s return is also much more variable. Historically, its volatility has been more than twice that of farmland.

Two trends are driving the farmland investment thesis now: rising global demand for food and a shrinking supply of arable land. In the past 20 years, more than 11 million acres of U.S. farmland were lost to development. Climate-related factors such as water scarcity are also limiting the supply of arable land.

At the same time, the world’s population is expected to top more than nine billion by 2050—and agricultural productivity will need to double to meet the expected global demand.

[...]
"
 
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earth_imperator said:
An interesting news article in BARRON's mentioning Farmland Partners Inc. (FPI) and Gladstone Land (LAND) and others:
"
Farmland Is an Inflation Hedge. How to Invest.
By Lauren Foster, Updated July 29, 2022 8:21 am ET / Original July 29, 2022 1:30 am ET

im-593392

Paul Pittman, chairman and CEO of Farmland Partners. Photograph by Evan Jenkins

At a time when stock prices are slumping and inflation is soaring, farmland looks to be an appealing investment. It is a real asset that performs well in inflationary environments, delivers stable returns over long holding periods, and exhibits low correlation to financial assets. What’s more, farmland prices stand to benefit from growing concerns about food and land scarcity.

U.S. farmland has posted an average annual return of 11.2% for the 25-year period that ended in March 2021, according to the advisory group at Green Street, a commercial real estate analytics firm. That compares with a 9.6% gain for the S&P 500 index in the same period. The S&P 500’s return is also much more variable. Historically, its volatility has been more than twice that of farmland.

Two trends are driving the farmland investment thesis now: rising global demand for food and a shrinking supply of arable land. In the past 20 years, more than 11 million acres of U.S. farmland were lost to development. Climate-related factors such as water scarcity are also limiting the supply of arable land.

At the same time, the world’s population is expected to top more than nine billion by 2050—and agricultural productivity will need to double to meet the expected global demand.

[...]
"
More...

I do own quite a bit of Farmland Partners already. Trying not to keep all my eggs in one basket...
 
Cabin111 said:
I do own quite a bit of Farmland Partners already. Trying not to keep all my eggs in one basket...
More...
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LAND looks pretty good @ first glance;
its farmland is not limited to CA, farms in 5 states. Good dividend stock/ above 50 dma. Someone asked Dave Ramsey ''why do so many REITs underperform??'' Too hi fees Dave said.
They 're buying it for sure in $20s, this year:caution::caution:
 
Cabin111 said:
This is a bit of a gamble/bet for me. I am betting that we will get normal rains this winter in California. It not, much of this ground will end up going fallow!! We'll see...
More...
Those are long term leases so unless the farmer goes broke, it shouldn't matter.

It's a good play, not the best looking chart in the world, but I like it.
I think I mentioned this to you before, but you should wait before you sell the calls, ie not the same day you bought the stock. Especially this stock. I'd just sit on it, wait till it gets to $28, and then sell the leaps.

Will it make it to $28 anytime soon? I think there's a good chance it will.

For one thing, all their leases are triple net, ie the lessee is responsible for all the costs, including the taxes. The other thing, at least if you read their sec filings, they only own land that has excellent access to water. Now as I mentioned above, that shouldn't matter, they only do business with established and proven operations that are well financed so if the crops fail, oh well... BUT.....I just did some DD for ya, and an acre of CA farmland that has adequate water access is selling for north of $20,000 acre. And that's just for raw farmland.

I looked up a few of their acquisitions in CA, where they own about 32,000 acres, and they are sitting pretty. For example last year they bought an olive farm, 2300 acres, for $38M. That comes to $16,500/acre. A steal. It's probably worth twice that.

https://www.acrevalue.com/map/?lat=41.001228&lng=-121.445314&zoom=7

Their top 3 states are CA, CO, FL.
Look at those prices in the link above.
About 90K acres in those 3, another 20K elsewhere.

The company has an enterprise value of $1.5B, and since they own 114,000 acres.... that comes to about $13,500 acre average. So this company is solid, because I suspect the total value of all that acreage, if they were to sell it all today, is worth way more than $13.5K acre. Sure some is probably far less, but with the lions share being in those 3 states, all with access to water... I think their holdings are worth more than enterprise value of the company.

The thing is though.... that's not even the business(!!!).
The business is collecting rent checks from all those farmers.
They are making (ballpark) $91M/year in lease revenue.

I don't know why this thing sold off so hard back in May, but FPI didn't, so whatever the reason, the sell-off was overdone.

This is a good stock. Sleepy... but you did good I think. I think you sold those Feb $25's way too soon. This thing will be above $28 easy by this time next year. All else being equal.
 
I'm a former California farmer...I'm in the middle of all these California farms. Before I sold my last farm, I leased it out for 3 years (alfalfa). The farm was in a good water district (above ground water and quality pumps). In the contract, there was a provision for the amount of water available during the lease. The lease amount could drop if the other farmer wasn't allowed a certain amount of water (either ground or above ground...Surface-canal). I am sure many farm leases now contain similar language.

The state of California has totally stepped in and now controls how much water can be released and to whom. Just as you hear about the water wars on The Colorado...The same is happening to California farmland.

People will get higher priority that farms. Landscaping will change...I believe ALL of California's housing will look like Phoenix...Drought resistant plants (grass in parks and at schools).

Who gets the water...A voter or an almond orchard or vegetable field??
 
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