read the 10-k of PICO. Pay attention to the WATER assets. They go into every detail. Add up how many acre feet of water they own (several lhundred thousand at least). Then read they just sold a mere 2% oif that (7,240 acres feet) water for $88 million. But they say ALL the water they own is worth only a couple hundred million (BV)? But just 2% of their water sells for $88 MILLION? then check out real estate. They sold 560 lots and 41 hoomes in 2012. They still have 4,912 lots left, after selling 560 (for $59 million). READ the 10-k! They still own 4,912 lots, but they carry on the books at $123 million only. But in 2012 560 lots and 41 homes got $59 million:
"Of these 4,916 lots and homes we own or control, 2,479 are located in the Central Valley region of California, 1,602 in the Monterey region of California, 124 in the Bay Area of California and 711 in the Central Puget Sound market area of Seattle, Washington.
As of December 31, 2012 , we have a carrying value of approximately $123.4 million for the acquisition, development and home construction of all our lots."
See? if 560 lots & 41 homes generate $59 million, what will 4,912 loist generate? A ton more than the $123 million they tell investors in 10-k it's worth. This company should be taken over and busted up. Mgmt doesn't care. They take huge salary and sit on assets. I bet if you brought up all values to 2012 sales prices, BV of PICO is easily between $30 and $35. Maybe a lot higher. Someone call Jim Cramer. he'd love the story. the numbers in 10-k don't lie.
This is the corporate motto "Quietly and intelligently pursuing our business with the goal of increasing book value per share." YOU ARE FIRED---YOU FAILED.
The water sale was at crazy prices for some golf course.In 2007 they sold water at 20% of that value at the peak of the housing boom. You cannot impute that value to all their water. What they are good at is selling stock to the suckers. Last offering at $27. Does that say --OH! our assets are so cheap. They now need another offering. That is why the stock is not performing. If it sticks up its head, they will lay new stock on it. These guys got control of PICO as a personal piggy bank and have added zero value.
If this is so cheap, why doesn't management own it in size. They are taking plenty of income out of the company and yet do not buy stock. Hart only owns 30,000 shares and those were from options. They know there is no catalyst and that canola is a big liability. If this was a free lunch, the management and directors would be all over it.
Sentiment: Strong Sell
The lots are unimproved and will require much more capital to get them saleable--like utilities and roads and schools. The majority are also in the central valley and Monterey area where CA cut off the water to save the smelt. The water assets are not able to be sold anytime soon. They are in distressed localities. The present value of the water assets is much less than current sale price of the 2%. You did not mention the canola disaster where they may need to write off $50mm and they are talking about doubling up. Avoid this stock until new management which is no time soon.
Sentiment: Strong Sell
I see PICO getting touted on value boards all the time. I have always passed because you have to discount the assets HUGE because of management parasites. Haven't looked closely at this for the past year and a half. Has anything really changed on the management front? It has always been an interesting collection of assets but if I have to wait until Hart is 75 to make money it doesn't work for me.
If the assets are there, why isn't the share price moving up in recognition of this. Even bad mgmt can't keep a stock price this low can they? Had I known mgmt was this #$%$, I would not have bought at $46. Seems I have a long wait to get anywhere near that price. Seems like I bought right at peak when everywhere I read stated mgmt of PICO was better than Warren Buffet himself if you compared the 10 year stock price performance of PICO verses berkshire. I can only hope some activist gets impatient and starts making some noise about getting rid of John Hart and all the other useless fat cat board members. What a joke!
cheap assets and truly terrible management make for a long, long, long wait until anything flows through to the stock holders. Nothing ever changes at PICO.....management keeps paying themselves for doing very, very little. This is the ultimate dead end stock.
Only part right. Mgmt has indeed run it as a piggy bank of over salary. But? PICO carris ALL real estate on teh books at $120 million. They habve 4,1912 lots left. They sodl 560 lots and 412 houses for $59 MILLION in 2012. That means there are 4,912 to go. PIUCO has at LEATS 300,000 acre feet of water stored. It is carried on book ar about $200 million. PICO just did a deal in NV where they sold 7,200 acre feet of eater for $87 MILLION. Add it up dude. that 7,200 acre feet they just sold for $88 MILLION is about 2% - 3% of ALL they water they own. but PICO carries ALL water value at about $200 million. SEE? HOW can 2-3% of your TOTAL water asset be worth an $86 million deal.... but that 2% of ALL your water stored is 40% of ALL your book value. .Duhh. Same with the $59 MILLIOn they sold or real estate. PICO states ALL book value of lots are $119 million. ALL 4,912 of them. but somehow in 2012 560 lots sell for $59 MILLION? And there are 4,912 lots left to sell? PICO should be a hostile takeover - then breakup. Buy it and auction off assets. or hold and develop yourself. The top 10 institutional holders own 62% of PICO. THEY KNOW that PICO UNDERSTATES BOOK VALUES!! PICO mgmt has cheated shareholders on NOT being honest of Book value and padding themselves HUGELY of salary - as teh stock has sunk. It is a recipe for CArl Ichan, Einhorn or even Warren Buffet. THE ASSTES ARE VALUABLE! PICO is worth $30- $35 (maybe more) on an auction of assets. 10-K justifies it. Look at the priecs they got and are getting. Jim Cramer would love this story.