That is some great info you put up. You talk like you are part of the local scene.
I don't have any real target price. I just take great satisfaction knowing it is significantly higher than what it is today. That 1,700 is not a precise figure. The press release just said more than 1,700 acres. No matter, the price per acre is still high.
In 2014 the company sold 100 acres for $8.8 million, or $88k per acre. In Q1 2015 the company sold 3.1 acres for $390k or $125k per acre.
As of the end of 2014 the company had 6 contract to sell land representing 16% of their land (1,674 acre) for proceeds of $47 million. At the end of Q1 the company indicates they have 7 sale contracts for more than 1,700 acres with sale proceeds anticipated at $58 million. This is huge. The average sale price is up to $34k per acre. A $34 k per acre value on the company's land yields an implied value of $365 million on their total land holdings. Wanna bet the company is undervalued with a market cap of $330 million.
We both got in in the late 90's. 1983 is unreal. I keep up on the periphery. I follow the E-2D Hawkeye development due to CSPI. The have content that goes in on those and it generates expense free royalty income that drop straight to the bottom line. It is like owning a lottery ticket where you get your money back if you don't win. (They carry huge amounts of cash on the balance sheet.) They also pay a nice 6% dividend.
Well, I am not sure I deserve any credit. All I stated is what I planned on doing.
The company's future still looks real bright. I have had to continue paring back my position. (It is the 800 lb gorilla now.) It is still over 25%. That is not really so bad. My father who passed on this past summer held ATRO as more than 50% of his portfolio. I have slowly been working it down to the mid 30%. It certainly worked out great, but is not what you would call smart.
I can't believe shares are at $75. I think the upside is going to be limited unless they pull a rabbit out of their hat. An acquisition may be just the ticket. Now is certainly time to use shares to gobble up some complementary business that will be accretive in the current year. I have no idea regarding what is available out there, but it certainly would make things interesting.
I agree with the comments from you both. I wasn't quite sure what to make of the reaction today. To me the option to settle in cash is huge. In the old days a convertible was followed by massive illegal naked short selling to drive the conversion price into the toilet. The buyer then had a company in their death grip. They could short (illegal naked short) them into oblivion or if they managed to turn around the buyer would make a killing on the conversion seeing the manipulated the conversion price to their advantage. In this case the company is not borrowing out of weakness and has the option to settle in cash. After seeing that the conversion price is more than $68 it make today's reaction look overdone. I am sure a good amount of the volume today was naked short selling. I wouldn't be surprised if a good amount of that was illegal.
It will be interesting to see tomorrows action. I expect the share price to move back higher. My guess would be that the buyer intends to short into any price rise so the impact may be muted for a week or two. I would love to know what to what extent the buyer intends to hedge.
The $425MM is a conservative estimate of the FMV of the equity (market cap). You are comparing apples to oranges. The true enterprise value is far higher than $500MM. I am not a big fan of using enterprise value. Adding in the debt makes no sense to me.
Great point on the tax issue. That tax thing presents a real conundrum. I have been bitten by my desire to avoid a tax liability to my detriment also. It is just too easy to avoid selling by thinking how much you are avoiding in taxes only to watch your position plummet. I can often eliminate the tax issue from my decision making, but not always. You can't ignore the tax issue, but you can't let it drive your decision making.
This is a great conversation. Selling is the second most important decision, the first being when to buy. I usually buy a little at a time slowly building a position. It probably qualifies as irrational. I have never gone back and analyzed whether I would have been better off buying all at once. I am trying to avoid the remorse of buying and then watching the price fall and kicking myself for not waiting for a better price. (I think in some instances keeping your sanity tends to override acting rational. It doesn't change the fact that it is tough to always act rational and we sometimes don't.)
When it comes to selling I have a much better command of my emotions. I sell when: 1) the reason I bought a company for no longer applies; for example I was wrong or their prospects have taken a big turn for the worse. 2) The shares have become overvalued. 3) I think I can sell a small portion and buy it back cheaper; I would have done that when ATRO crossed $70 if I had any common shares in tax deferred account, which I don't.
I usually sell everything when I decide my reason for owning no longer applies or the shares have become overvalued. and these are the only two reasons I sell any kind of substantial amounts. The third reason is more for entertainment value.
I pick ATRO. Since 2000 the S&P 500 is up about 122% while ATRO is up well over 1500%. It doesn't appear that ATROs performance mirrored the overall economy or the market.
I know you think the statement was aiming to ridicule. It wasn't. It is just my opinion as to the affect of selling ATRO or a number of other companies just because their price has risen. It is an extremely common error. The pull the flowers and water the weeds is a statement of another famous investor and I was just repeating the sentiment because from my experience it holds a lot of truth. It may not be pc, but you will not make big money in the markets being pc.
What does the market changing direction have to do with the price of ATRO? The company was up 20% last week on a day when the market went down. I really don't care what the analyst estimates are (their collective record is abysmal and I don't see any reason for that to change going forward. Note: this quarter the analysts were off by 27%.) and think the whole guesstimate idea is stupid to begin with. (I have thought this way since the share price was about $4 and it has worked pretty well so far.)
I am also not interested in whether you buy my argument. You can sell for any reason you like. Some will be rational and other reasons may not be. Selling because the price has risen or because you can sell some and get your initial investment are not rational reasons. It may satisfy some human weakness (weaknesses that we all have), but it can't be explained in rational terms.
I agree completely that selling to stay within some dollar or percentage limit is perfectly reasonable. I sold some shares in early January because my position in ATRO keeps expanding to an uncomfortable large 25% of my portfolio. I sold to avoid a future financial catastrophe and having to abort my early retirement plans. I may pick and choose my timing as to when I sell (preferably after the price has had a nice boost), but I am not selling because the price has risen.
Yeah, I agree. The future looks pretty bright. It would not surprise me to see earnings over $3.50. I think the $70's are inevitable. The $80s are not that far off. What the shares do next week I have no idea.
Sounds like the old water the weeds pull the flowers strategy. You were taught wrong. The time to sell is when the shares are over priced or the company's fortunes have changed. Neither apply in this case. If you are selling because the company has become the 800 pound gorilla and taken over your portfolio or you want to use the sale of 10% of your position to purchase a new vette those are pretty good reasons. The price rising is not a good reason to sell. If I would have sold when my shares double and rose to $4 I would have missed out on a huge amount of gains.
I am still slack jawed. To put this in context the earnings were $.97 backing out the most recent stock dividend. That is amazing. Estimates for 2015 are bound to rise sharply based on the strong margins. 2014 Earnings would have been $3.06 absent onetime acquisition charges.
Everyone is entitled to their opinion. I have no problem with that. I am also fully comfortable with my conclusions. I have done this for a very long time and have seen this scenario many times over. I have hit my share of home runs, but am plenty happy with singles.
My value is net of the debt. My value is only based on the value of the land. Many of these property rich companies are valued pretty richly. It is almost as if part of their multiple is explained by the value of land and an additional amount is tacked on for the earnings power. Look at the timber companies for example. ALCO is nowhere as richly valued. In my opinion the company is very conservatively valued at $425 million. Earnings can be expected to be between $2.50 and $3.50 which indicates that based on earnings alone you could value the company at more than it is valued at currently. The shares traded at $58 a few weeks ago. What has changed? Their prime revenue quarters are just coming up. The company has $50 million in inventory on the books an another $10 million in receivables. Review prior 10-Qs and you will see what happens to that inventory in the subsequent quarter. It is converted to revenues. Next quarters earnings should be real strong. It will not be years for the earnings to jump.
The fact that they paid fair value for the orchards shows how undervalued their own orchards are. That provides confirmation that you didn't have prior to the purchase.
I last pulled my numbers together prior to the completion of the acquisitions. I place what I feel is a conservative valuation of $425 million on the company. This valuation ignores assets like the cattle the subsurface rights, aggregates, etc.
This is definitely a buying opportunity and I have been putting my money were my mouth is. The move to $58 made sense. The drop back to $45 is inexplicable. I have no idea what spurred this 25% drop, but recognize this for what it is. The orchard purchases confirmed my appraisal of the company's existing orchards and the sugarcane sale and the easement sale confirmed the value of the other vacant land. The large boost to earnings that is coming will complete the picture. I don't understand the drop and know that looking for an explanation is a fools game. It is what it is and you can act on it based on how you see it.
Another approximately 100 acres under contract for $5 million. Now the total is about 1,700 acres for $47 million. It should make for a good 2015 and 2016. Will they ink more deals in the intervening time period?
The REIT news is also pretty exciting. Looks like a good chance dividends will be rising in the next few years.