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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (56467)	12/30/2015 3:46:24 PM
From: E_K_S	1 Recommendation Recommended By work4ever Respond to of 78744

Re: Investing in Almonds - Look to AG REITs Quality Systems Inc. (QSII) Not a pure play but the best I could find other than starting an orchard myself. AFCO is one of three AG REITs (LAND and FPI the other two). I started equal weight position in AFCO and FPI in November, both quite small. AFCO buys established farms/orchard specialty crops and own almond, walnut & pistachio orchards along w/ vineyards and one farm that produces specialty field crops. The established orchards can take as long as 5 years after planting 1 year old tress before they will begin production. They will produce up to 20 years as long as there is water and they do not get attacked by disease and/or pests. I was looking at starting my own hazel nut orchard and it can cost as much as $30K per acres to establish on new land. So the cost is not only in the land value but the opportunity cost and time necessary to own a producing orchard. Asia and China specifically have grown to love almonds (and now hazel nuts) and will pay big bucks for product. Also, AG REITs have a much different depreciation schedules than REITs that own commercial buildings. No depreciation on crops that product that are 2 years ols or younger, a sliding scale on plants that will produce up to 10 years and for orchard crops (trees that produce 15 years or more) can take the largest deductions. Therefore, depending on how you account for established orchards and if you stagger you replacement trees into the field, it can be a fun accounting exercise for the management company. The AG REIT market is still young, maybe only 3 years old and could grow as these company/funds compete w/ the traditional CO-OP private model. The current issue is their use of debt (still pretty high w/ 60% loan-to-value ratio for credit facilities) and some private convertible preferred paper typically issued to the seller of the farms w/ a staggered time period to convert preferred shares into common units. That said, FPI probably the best deal as they focus on row crops but AFCO the most interesting as they do specialty crops. Both can be has at a discount to BV. --------------------------------------------------------------------- Still bullish on QSII the cloud based health management company. It's a GARP stock and the value is in their growth rate and hopefully growing earnings. I was just checking that since my Buys in October 2015, it's +45%. I do have some shares I bought earlier in the year. A new CEO was put in place and one division sold and a new company was bought. Company did take on debt to do those transactions and me stop payment of their very generous dividend in favor of double digit revenue growth. The key event in late 2016 early 2017 when they announce the full integration of their cross platform cloud service and move exclusively to that service platform. Billing will be a subscription for use model and not one based on software licensing. Have a Great New Year and may 2016 see steady slow growth EKS