BWEL - J.G. Boswell

[benbuffett]

One of the largest farm operations in USA, plus land holdings in Australia. Less than 300 shareholders so you won't find any SEC records. Trades near 1000 per share currently. Has a long history dating back to the 1920's.

 

Anybody follow this company? Hard to find info.

[LC]

Ran into it a few months ago but I put it in the too hard pile due to the lack of info and ignorance on my part of the farm industry.

[oddballstocks]

Welcome to the world of unlisted stocks.  This is a fairly well known stock.  You can buy a share and get an annual report from the company.  Another resource is King of California, a book about their history.

 

This isn't that cheap of a stock, but the play here is their water rights.  What type of info are you looking for?  I presume you already have the annual.  King of California details their water battle really well.  I'm not sure how you value the water, I've seen some estimates as high as $3k an acre.

[gfp]

This yahoo group can also be helpful on Boswell -

https://groups.yahoo.com/neo/groups/jgboswellgroup/info

 

Attached is a recent letter sent out to shareholders

-CCE04202014.pdf

[Tim Eriksen]

Welcome to the world of unlisted stocks.  This is a fairly well known stock.  You can buy a share and get an annual report from the company.  Another resource is King of California, a book about their history.

 

This isn't that cheap of a stock, but the play here is their water rights.  What type of info are you looking for?  I presume you already have the annual.  King of California details their water battle really well.  I'm not sure how you value the water, I've seen some estimates as high as $3k an acre.

 

I would add that in the past the company required you send proof of ownership in order to receive the annual report. 

 

The valuation is based on water rights.  Be careful with any sum of the parts valuation.  The California farm land without water rights isn't worth much.  I grew up in the area so I think I have a good grasp of the quality of the land.  Secondly, it is my recollection that the State can interject itself into any water rights sale (if true you would have wealthy SoCal water users versus poorer Central Cal farm worker jobs, those who would object to a corporation benefiting from the sale of water, and possibly environmentalists that would want the water to flow naturally).  A good place to track the value of water rights is the MWD - Metropolitan Water District for southern California, who would be the most logical buyer. 

[yadayada]

if you search on the web, there are some good comments on those water rights, they are not worth very much. Seems like the typical value trap this

[oddballstocks]

if you search on the web, there are some good comments on those water rights, they are not worth very much. Seems like the typical value trap this

 

Or could be like Western Lime, a company that traded for $5k a share for a decade then received a buyout offer for $50k a share.. sometimes patience is rewarded.

[yadayada]

yeah but if the water assets aren't worth nearly as much this won't be a 10 bagger. Also why the hell invest on the offchance of somemthing like that happening? THere are like 70000 publicly traded company's out there. so for me it is NEXT. congrats if im wrong.

[Hielko]

yeah but if the water assets aren't worth nearly as much this won't be a 10 bagger. Also why the hell invest on the offchance of somemthing like that happening? THere are like 70000 publicly traded company's out there. so for me it is NEXT. congrats if im wrong.

That's exactly why there are bargains in this corner of the market.

[Tim Eriksen]

The other issue is could they structure the sale of the water rights in a tax-efficient manner?  If not you have to include a 35% reduction in order to get what shareholders will receive.  I have owned it in the past but I don't presently.

[yadayada]

my point was, there are better bargains out there with 70k publicly traded company's. I cant find it, but i guess if you look hard enough I saw some people make a very convincing argument why their water assets aren't nearly as valuable as a lot of people seem to think. I couldn't really counter that argument, so that is why I don't think this is a bargain. I rather buy more GNMCA or OUTR then this, upside is much more certain there. Rather go after the low hanging fruit myself.

 

did find it

http://boards.fool.com/jg-boswell-hidden-gem-29333124.aspx?sort=whole

 

Oooh...we're discussing water policy for Southern California? I was raised on this stuff!

 

For at least the next five years, and possibly much longer, the water thesis for JG Boswell is 100% dead. This year's winter snowfall in California was so epic that our state is out of water storage. See here:

 

http://cdec.water.ca.gov/cdecapp/resapp/getResGraphsMain.act...

 

That site shows that pretty much every state reservoir in the State Water Project (SWP) is filled to the brim. In fact, they're releasing water as fast as they can without compromising downstream safety, because the expected melts coming off the mountains this year are bigger than anything seen in over a decade, and there is a possibility that a reservoir could overspill this year unless they release water like crazy in the spring.

 

Closer to Southern California, the Metropolitan Water District is maxing out capacity on their Inland Feeder project to fill up Diamond Valley Lake, the largest reservoir on the populated side of the San Andreas fault in Southern California. A year ago, they thought it might be a decade before Diamond Valley was full again. Now, it'll probably be full by the end of summer, and local agencies are recharging groundwater storage as fast as they can.

 

LA City has no need for JG Boswell water, since it uniquely has three water import sources: the water from the State Water Project through its membership in the Metropolitan Water District, the Colorado River canal, and the city's own LA Aqueduct which sources water from the eastern Sierra. The Colorado remains compromised, but the other two sources now have enough water in storage to provide security for years.

 

Coastal Orange County recently completed a groundwater replenishment system that takes water coming out of its sewage treatment plant and further upgrades it to nearly distilled quality. It's then pumped into the ground to prevent saltwater intrusion and to recharge freshwater storage. Years from now, the water will be re-pumped, retreated and then made available for use by utility ratepayers, reducing the need for imported water supplies by an appreciable amount. San Diego will likely build one of these facilities too since they're always last in line for California water rights.

 

That leaves inland Riverside and San Bernardino counties, which historically have the highest cost of water delivery. This old web site from the state shows how much lifting cost affects water delivery:

 

http://www.energy.ca.gov/research/iaw/industry/water.html

 

366 kwh/acre foot for State Water Project water to be delivered at Bakersfield, 1666 kwh for delivery to Los Angeles, and 3800 kwh for delivery to the Inland Empire.

 

That water cost, and the lack of appropriate storage locations west of the San Andreas Fault, left Southern California acutely vulnerable to an earthquake, since all three major water import sources -- the SWP, the LA Aqueduct, and the Colorado River aqueduct -- crossed the San Andreas, and presumably they will each be severed when the big one hits. Twenty years ago water managers in Southern California began a multi-decade plan to solve this problem. The big new reservoir at Diamond Valley Lake, which stores 800K acre feet, opened in 1999. It can supply 100% of the water needs of Southern California for a year in a business as usual scenario, and much longer under emergency rationing. The groundwater replenishment facility in Orange County opened in 2008.

 

And the Inland Feeder, the most recent major piece of the system, opened last year. It allows water from the SWP to flow under the San Gabriel Mountains, rather than over the Tehachapis, thus invalidating the cost figure shown above. The cost of getting SWP water to Riverside and San Bernardino County is now half what it was (meaning, equivalent to the cost for LA City), the capacity for the amount that can be moved in high discharge years like 2011 is multiplied several times, and the capacity to store it in Diamond Valley Lake and in various groundwater systems is now there. Put together, this infrastructure now allows Southern California to store water in good years to a degree never possible before, enabling it to ride out droughts with far more resiliency than ever before.

 

So what does this have to do with JG Boswell? It simply means that its water rights, which were always a stranded asset, have become even more of a stranded asset. In the short term, the reservoirs are all full because of this year's weather, and in the long term, Boswell's potential customers south of the Tehachapi Mountains now have alternatives that were not in place 10 years ago.

 

And there's no chance that the water under Boswell's land has local value in the Central Valley, where farmers are entitled to purchase water at something like 1% of the cost paid for water in California cities.

 

Best,

C9

 

Like I said, GL , but there are better bargains out there with much better catalysts and less risk of underperforming.

[wachtwoord]

Does anyone have access to annual reports for this? Also, if I were to buy a share to get access to an annual report does anyone know how to contact the business? (I haven't been able to find an e-mail address).

 

To go to their website (https://www.jgboswell.com/) you need a username password combination ...

[oddballstocks]

Does anyone have access to annual reports for this? Also, if I were to buy a share to get access to an annual report does anyone know how to contact the business? (I haven't been able to find an e-mail address).

 

To go to their website (https://www.jgboswell.com/) you need a username password combination ...

 

OTCMarkets.com has contact info for most companies

 

Contact Info

101 W. Walnut St.

Pasadena, CA 91103

 

Phone: 818-583-3000

[wachtwoord]

Does anyone have access to annual reports for this? Also, if I were to buy a share to get access to an annual report does anyone know how to contact the business? (I haven't been able to find an e-mail address).

 

To go to their website (https://www.jgboswell.com/) you need a username password combination ...

 

OTCMarkets.com has contact info for most companies

 

Contact Info

101 W. Walnut St.

Pasadena, CA 91103

 

Phone: 818-583-3000

 

Thanks!

 

I'm from Europe though. Will they send me an annual report by old fashioned mail? So weird when they don't have e-mail available.

 

I found their fax too so I might use that instead if I end up buying a share. Fax: (626) 583-3090

[wachtwoord]

Little update: I did fax them but did not hear back from them yet.

[sarganaga]

Found this comment on a facebook page that appears to be maintained by JG Boswell employees. Don't know what it means, if anything, but it seems really odd. Joe Boswell's facebook page indicates he is "Assistant to the First Lady's Chief of Staff"

 

 

Joe Boswell —This company needs a complete massive overhaul, and soon. It should also be called JJ Boswell, not JG Boswell. The Griffin needs to be dropped.

 

Thanks in advance.

 

-Joseph John Boswell

https://www.facebook.com/pages/JG-Boswell-Co/134761113242652

[fareastwarriors]

Is anyone still looking at this company?

[mjm]

been buying, so might stay away.  back to where it was 10 years ago or so.

[wachtwoord]

I own it but with a moderate size due to the underfunded pension liability.

[SI]

That pension remains underfunded but got sharply better this year given rates, the partial move to defined contribution which sits alongside the 100mn they generated in cash flow from operations this year.

 

With the stock under book value, a book value which features land/water in California from 90+ years ago and the company turning on the buyback - it makes the market opinion quite strange.

[Spekulatius]

That pension remains underfunded but got sharply better this year given rates, the partial move to defined contribution which sits alongside the 100mn they generated in cash flow from operations this year.

 

With the stock under book value, a book value which features land/water in California from 90+ years ago and the company turning on the buyback - it makes the market opinion quite strange.

 

Does anyone know any company, preferable in California, that had monetized water rights successfully? My own assessment is that the water rights are worthless. I could well be wrong here, but I think they are attached to land ownership and can’t be separated out.

[SI]

Paramount is one large example that has often been a buyer and seller. But I think you are approaching the water rights in a different manner than I would. The water rights off the Kings & Kern River, in the ground and on state allocation are more the competitely advantaged ability to access the worlds most productive farmland adjacent to large swaths of population with year round weather in a wildly scaled(275k acres in total)  manner.

[Spekulatius]

Can anyone forward me the latest annual report? If so, please PM me.

[oddballstocks]

Water rights... Consider me a water right skeptic. Not that they have the rights, they clearly do, but the longevity and lasting value.

 

I think of water rights as having value as long as someone more politically significant doesn't come along.  If LA needed more water I am pretty certain that the state would confiscate them with little recourse.  Now Boswell could sue back, but a suit like this would take decades to litigate rights from 100+ years ago, and would be expensive.

 

This is an unpopular view, but for me the water rights allow the company to grow and generate the return they have. To count them beyond the ag is double counting in my view.

 

I just don't see a scenario where someone buys these rights at a market price. Rather I can see value disappearing through political action.

 

[Spekulatius]

I am sceptical about water rights as well. for me, the water rights are attached  to the land, as the land would be worthless without water.

Below is a link to a story about Reznick, another land baron in CA.Boswell is mentioned too, but more in passing. The article does give a good idea about the struggle with water, as well as some deals that did occur. Boswell also had a real estate project in the foothills that was cancelled, presumably also because they could not secure the water rights at price that made this economical.

 

https://story.californiasunday.com/resnick-a-kingdom-from-dust

 

On the topic of BWEL, I found it interesting that BWEL generates half their profits from a 46% owned cotton seed JV business (the remainder is owned by DWDP, which is going to spin of their AG business). This seed business (Phytogen) seems to be a leader in cotton seed and appears to be highly profitable. The earnings are up considerable YOY from 2016 to 2017 and I don’t know if 2017 was an outlier or 2016. However, it is clear that the business ought to be quite valuable. I am also sure that DWDP would look e to own this completely and maybe after the spinoff they make an offer that BWEL can’t resist. I bought quite a few shares of BWEL during the recent liquidation dump of a few thousand shares. With a book value of $600/ share, owning lands that was purchased decades ago, I figure I got more than I paid for. It might be dead money, but I don’t think I will lose money here.