Margins are historic lows in Canola crush margins. Crushers bidding for scant Canadian crop and driving margins through the floor. PICO notes in release but not severity. The LaJolla crushers try to show the Wisconsin boys how to do it. great --now doubled down in OK. Goodbye stock.
I believe the OK deal is an option. Surely the boys will wait for the crush margin to recover or no one would finance. Nor should they. A lot of crush capacity has been added to the market by the big boys. They can't all be wrong (or can they)? No such thing as normal weather any more.
CAnola isn't what PICO about. It is the real estate and water. The real estate is picking up fast.. They sold and got money for the legacy insurance run off. If you add teh numbers, PICO also just sold via option to end of 2014 $88 million of water. They carry ALL the stored water on books for about $200 million. The water they just sold for $88 million is about 10% - 15% of what they have. The real estate and water assets are on the books for about 50% or less than what they are worth. They also own close to a majority stake in SPIGIT. Do a google search on SPIGIT (private co.) That is carried at little or no value. But it could be worth something in a few years time. If you think PICO is just CAnola, good luck selling shorting. A LOT of people woudl like to get their hands on the almost 5,000 building lots PICO owns.
The booming real estate business made a whopping $4MM in Q4 and $2.3MM for the whole year. So they sold 10% of their land and made $2.3MM. Doesn't that mean if they sold it all, they would make $23MM. Costs a fortune to develop and sell land.
They have a 30% margin in building. If they sold everything that is $1.20/shr after tax added to BV. They are losing $1/shr each year from overhead and AG. If the water sale takes place at $88MM, it would add $1.50/shr to BV. These are small numbers. They reported a loss in Q4. AG is losing $13MM/year and $20MM this year. They missed the entire stock market rally. They also own very little stock so they are not aligned with us.
Spigit is worth about $1/shr, The water asset monitization is very far away. The building lots cost $120MM and Canola was $90MM so they are not far apart in cost. The lots were a great idea but most are in the central valley of CA. How do you get past the crazy high salaries. They almost defaulted on the canola plant. This quarter will be a large loss in the plant and they will have to put up more equity. It is poorly run closed end fund.