Tuesday, August 14, 2018

Farmland Partners Stock Price Drop

Farmland Partners stock has taken a beating this year. It is a REIT of farmland operations.

Here is its official description on Yahoo finance:
Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of the date of this release, the Company owns or has under contract over 166,000 acres in 17 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, South Dakota, Texas and Virginia. We have approximately 30 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.
The chart below reveals that Farmland Partners stock price is half of what is was 4 years ago with a PE ratio of 320 and an earnings per share of .0220. (These numbers vary depending which site you seek them.)

I compared this to a U.S. real estate ETF, IYR, which has a PE ratio of 7 and earnings of 3.66 percent.

I never did understand the farmland "sure thing" investing mentality, probably because I knew from growing up on a farm that farms don't make money that doesn't require reinvestment and the risks are huge every single year. U.S. farm policy essentially guarantees payments to cover inputs on monoculture crops which helps - especially the mega-farms, but policy can change. So can tariffs, weather, re-investment needs, labor costs, interest rates, and foreign crop production levels.

Remember when Jim Rogers' followers thought he was genius? CNBC thought he walked on water. Now, not so much.

(courtesy Yahoo finance)


1. Farmland Partners: Loans To Related-Party Tenants Introduce Significant Risk Of Insolvency - Shares Uninvestible. Seeking Alpha.
2. Farmland Partners: Puffery. Seeking Alpha.