Author Topic: CAOX - California Orchard Company  (Read 6490 times)

Jurgis

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Re: CAOX - California Orchard Company
« Reply #10 on: April 20, 2018, 10:00:18 PM »
;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D 8)

Hope some of you got in!

What ScottHall runup looks like.  8)
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ScottHall

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Re: CAOX - California Orchard Company
« Reply #11 on: April 20, 2018, 10:25:13 PM »
;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D 8)

Hope some of you got in!

What ScottHall runup looks like.  8)

I think the undervaluation was so extreme here that it is still cheap. These shares are worth thousands in any reasonable buyout or liquidation event and the company is consistently profitable. It is at a little over 11x trailing earnings for vineyard assets that are in quite high demand. Search for articles about central coast vineyard acreage. Harvard loves these assets and is frustrated they canít buy many portfolios of size. If this company wanted to sell there would be no shortage of bidders.

The company took out a small loan to buy more vineyard this past year, so the acreage count is up. The price paid per acre was $43,571.

They have 1,823 acres roughly. There are 19,747 shares. The numbers pencil to me.
« Last Edit: April 20, 2018, 11:25:47 PM by ScottHall »
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goodnight-loving

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Re: CAOX - California Orchard Company
« Reply #12 on: April 23, 2018, 11:22:28 AM »
Thanks for posting this name.  I'm curious, how did you find it?

SoonParted

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Re: CAOX - California Orchard Company
« Reply #13 on: April 23, 2018, 12:53:01 PM »
;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D 8)

Hope some of you got in!

What ScottHall runup looks like.  8)

I think the undervaluation was so extreme here that it is still cheap. These shares are worth thousands in any reasonable buyout or liquidation event and the company is consistently profitable. It is at a little over 11x trailing earnings for vineyard assets that are in quite high demand. Search for articles about central coast vineyard acreage. Harvard loves these assets and is frustrated they canít buy many portfolios of size. If this company wanted to sell there would be no shortage of bidders.

The company took out a small loan to buy more vineyard this past year, so the acreage count is up. The price paid per acre was $43,571.

They have 1,823 acres roughly. There are 19,747 shares. The numbers pencil to me.

ScottHall, where do you find the 1,823 number in the Annual Report?

ScottHall

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Re: CAOX - California Orchard Company
« Reply #14 on: April 24, 2018, 03:00:45 AM »
;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D 8)

Hope some of you got in!

What ScottHall runup looks like.  8)

I think the undervaluation was so extreme here that it is still cheap. These shares are worth thousands in any reasonable buyout or liquidation event and the company is consistently profitable. It is at a little over 11x trailing earnings for vineyard assets that are in quite high demand. Search for articles about central coast vineyard acreage. Harvard loves these assets and is frustrated they canít buy many portfolios of size. If this company wanted to sell there would be no shortage of bidders.

The company took out a small loan to buy more vineyard this past year, so the acreage count is up. The price paid per acre was $43,571.

They have 1,823 acres roughly. There are 19,747 shares. The numbers pencil to me.

ScottHall, where do you find the 1,823 number in the Annual Report?

Oh, it's not listed explicitly. I just added together the acreage the company leases out, the acreage the company operates itself, and the new acreage acquired listed in the "Subsequent Events" note.

Excerpts attached so you can check my math.

Thanks for posting this name.  I'm curious, how did you find it?

One of the Lost Tomes of Value Investing, the Walker's Manual of Unlisted Stocks reference guide. It's not in print anymore and prices have spiked for used copies, but it has some brief details plus financials for OTC/Pink Sheet companies. Many of which otherwise don't file with the SEC.

It's great, but the problem is the financials are from the mid-2000s. So how do you get financials? Unless you know someone who has them, generally it involves buying a share or two and then requesting the information as a shareholder. In my experience many companies open up once you establish yourself as a shareholder. Not always - there are some jerk companies out there - but more often than not.

As to how I decided on CAOX in particular?

My dad was really big into wine and always wanted to be in the business, used to brew his own beer at home and won a blue ribbon for one of his brews at the Intermountain Fair. But he was a wine snob at heart and never reached that dream.

So it was sort of sentimental in that regard, the chance to make money on the old man's behalf on some shares of a vineyard. He liked land; "God's not making any more of it!"

Beyond the nostalgia trip that drew me to the company, I used Walker's Manual to get a quick overview of the company's land assets and then confirmed myself using the Monterey county government's website. I got a share and sent it in to be held on record, sent a letter to the company, and CAOX sent me the reports for 2016 and 2015.

To be honest I could do the math on how much the land was worth but I wanted to see if there had been any developments in 20 years. Debt, asset purchases, that sort of thing. The report confirmed my intuition that this company was sitting on a fortune of real estate. Earnings per share are volatile but the company is consistently profitable.

I have bought more shares since the first on a couple of occasions, and now it is now a decent sized position by my standards. I think these vineyards are trophy assets and they're for sale at a pretty high cap rate.

And by the way, there is a lot of demand for these sorts of properties. Take a look at this article, and especially the Hancock deal. $44 million for two Monterey vineyards totalling 1,582 acres. $27.8k per acre... Hancock has made some good money on that investment based on current market prices.

http://www.farmlandinvestorcenter.com/?p=722&option=com_wordpress&Itemid=171

CAOX owns, best I can tell, about 1,823 acres. The market cap is 19,747 shares x $1,375 per share = $27,152,125.

Or $14.9k per acre, at today's prices.

Vineyard prices have gone up since then, too. Check the California Ag Trends book I linked in my second post on this topic.

The one thing I will say is that I wish the company was spending its money on share buybacks at today's prices rather than buying new acreage. Why pay $43k in the private market when you can buy in your own shares at $14.9k?
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ScottHall

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goodnight-loving

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Re: CAOX - California Orchard Company
« Reply #16 on: April 25, 2018, 04:38:46 PM »
Solid find.  What do you know about the other owners or management who are allowing it to be undervalued? 

Spekulatius

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Re: CAOX - California Orchard Company
« Reply #17 on: April 25, 2018, 05:15:56 PM »
https://medium.com/@ScottMoneyHall/the-curious-case-of-the-california-orchard-company-d29936b83983

Awesome work digging into this and succeeding. I am not an OTC expert, but ai know that some guard their financials well. I still have one share of VULC ( had an order in for a hundred but somehow ended up with one share LOL) to remind me how management can stonewall. I have never seen any financials of VULC and have no idea what thr hell they are doing. My one share is up 3.5x from when I bought it.
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Og

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Re: CAOX - California Orchard Company
« Reply #18 on: April 25, 2018, 07:24:16 PM »
Why do you believe some of these companies take such extreme effort to guard their financials?

Spekulatius

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Re: CAOX - California Orchard Company
« Reply #19 on: April 25, 2018, 07:35:19 PM »
Why do you believe some of these companies take such extreme effort to guard their financials?

I am guessing that these business were never meant to be public, shares were closely held and the shareholders/owners knew each other and a lot of them were involved in the business.

Then shares leaked to outsiders due due to sales from estates or from folks who didnít care about the business. The insider owners donít like it, but there is nothing they they can do about it -or is there? They can hide the financial, so outsiders are in the dark and maybe insiders can acquire shares cheaply, or at least run the company like they want to without others interfering.

^ The above is just a guess. I donít know and each situation is different.
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