The company, PICO Holdings (ticker: PICO), looks deeply undervalued. At a recent $10.40, the shares trade for a 30% discount to stated book value of $14.60—and book likely is very understated. PICO’s stock has been a serial disappointer for years, and is down more than 50% from its 2014 high. (ed. And don't I know it-- I'm one who's down 49%.) One problem has been the uncertain timing around monetizing the company’s water rights. After the recession, new construction activity in the West came to a halt, with Nevada hit particularly hard. Developers typically are the major buyers of water rights.

PICO made a poor acquisition of a canola-processing business in Minnesota that it sold last year. Some investors also have taken issue with management’s compensation, which they see as excessive.

Activist investors have taken a stand, and this year, most of PICO’s corporate board was replaced. Just as notably, Nevada’s economy is on the upswing. A number of large tech companies are building operations in the state, including Tesla Motors (TSLA), Panasonic (6752.Japan), and Apple (AAPL)....The path to a higher stock price depends on selling assets. Management has said it will return the proceeds to shareholders through stock buybacks or special dividends, rather than reinvesting back in the business. Last month, on the earnings release, Hart commented that the economic activity in the Reno area “should create significant demand for our northern Nevada water resources over the next several years.” If that happens, PICO’s stock could start to recover from its own long drought.