Limoneira Firm (LMNR) ($330MM market cap) is a California based mostly citrus farmer (primarily lemons, secondarily avocados) packager and part-time actual property developer that introduced on 12/1/23, they have been pursuing strategic options. From the press launch:
Scott S. Slater, Chairperson of the Board, acknowledged, “Over Limoneira’s 130-year historical past it has grown into one of many main, sustainable agribusiness firms on the planet with over 11,100 acres of priceless lands, actual property properties, and senior water rights. Over the previous 18 months, we’ve developed a strategic roadmap meant to boost close to and long-term shareholder worth. As we speak, we contemplate ourselves to be in a robust monetary place, having lately lowered our web debt place and rightsized the steadiness sheet by our ongoing strategic shift in the direction of an asset-lighter enterprise mannequin. Given the Board’s perception that there’s a disconnect between Limoneira’s public market worth and the intrinsic worth of our Firm’s underlying belongings, the Board believes it’s the proper time to discover all strategic choices to prioritize the Firm’s development and stockholder worth.”
Final summer season, the corporate hosted an investor day the place they laid out their estimated honest market worth of LMNR’s actual property and different belongings:
As we speak, the inventory trades for roughly $18/share, or a 40% low cost (60% upside) to the low finish of the above NAV (which they cite relies on current agriculture transactions). I waited a short time to purchase this one (the value has additionally are available in from the post-announcement pleasure) because it strikes me as a doubtlessly troublesome enterprise to promote resulting in an prolonged timeline:
- Agriculture/farming operations aren’t know as incredible companies, they’re value takers not value makers and in consequence, might be very cyclical. They’re additionally capital intensive, though Limoneira is attempting to be extra of a farm administration and packaging firm, as seen above, the worth is within the land and associated belongings.
- A part of the worth is in greater or higher makes use of of the true property, equivalent to troublesome to monetize water rights.
- This can be a outdated firm, foremost employer on the town (lots of their workers dwell on property in housing owned by Limoneira), in consequence, it is most likely onerous from a private relationship perspective to be the administration group that sells to outsiders. Simpler to take care of the established order.
However there may be motive to imagine administration does intend to promote, shortly after the strategic options announcement, they let 13D holder Peter Nolan on the board:
Limoneira Chairperson of the Board, Scott S. Slater, acknowledged, “… We’re happy to welcome Peter and imagine he will probably be a priceless asset in guiding the Firm as we proceed to execute towards our strategic roadmap to boost close to and long-term worth and start the exploration of potential strategic options geared toward maximizing worth for our stockholders.”
Peter Nolan, Chairman of Nolan Capital, Inc. commented, “I’m excited to be becoming a member of the Board of Limoneira because it enters this part of exploring methods to unlock further worth for stockholders.”
Peter Nolan, a former PE govt, owns 6% of the corporate and his household workplace has some previous expertise with actual property and agriculture companies. The 2 occasions of Nolan displaying up on the shareholder registry and strategic course of appear associated, hopefully he may help engineer a sale right here.
In contrast to different conditions, administration would not seem like an impediment right here; this article from the VC Star supplies some attention-grabbing background on the corporate, together with the way it got here public after they tripped the SEC shareholder rely quantity and needed to checklist in 2010. They have not gained a lot from being public, most likely is smart for them to be non-public once more. CEO Harold Edwards is quoted, “The worth the market perceives we’ve versus what we imagine is the intrinsic worth – there’s at all times been a giant distinction between these two issues. The thought is that possibly there’s a greater manner for us to function. Possibly there’s a greater possession construction that is not public. Possibly it is non-public, or possibly it is merging along with one other public firm.” Guessing we simply need to be affected person on a sale, possibly mid-to-late summer season is cheap.
Disclosure: I personal shares of LMNR
