ALCO - Alico, inc.

[griezeman23]

Seen a couple folks posting about this in other spots, so i thought I'd start a thread. Think this thing is quite cheap - both on an asset and profitability basis.

 

On profitability: If the increase in fruit drop rate and lower fruit quality (and overall FL citrus market) is really just due to a poor bloom in spring 2020, then I think the stock's trading at ~5x FY22 EBITDA... post-debt paydown and sale of the 15k in ranch land.

 

Nice to see them bump the div the other day...

[Longnose]

Ive been digging into ALCO too. I admit I havent had time to do my own thourough analysis. but the VIC write up that was mentioned and the article on Seeking alpha made enough solid points that its at the top of my list as soon as I can carve out some time to read through the 10K's and start making my own judgement if it is a solid investment. 

 

I will admit it may be a bit out of my circle of competence. Also, it would seem they are kind of a commodity producers. If so, are they the lowest cost producer? I believe the VIC article made some mention of this.

 

Then my question if they are in the commodity business is my only downside protection the cheapness of the assets? That would make me weigh my analysis more on the NAV side which seems to be the most compelling argument anyway. 

 

I'd love to see some more conversation around ALCO and the business model. Do they have any hidden moats? They've been around a long time and seems like they may have been mismanaged for a signifigant portion of their life. New CEO finally gets it and pulling these guys up and out?

 

Where is ALCO 5 - 10 years from now??

[Gregmal]

In addition to my comments in the other thread, I'd concur its "dirt" cheap. I'd like to see more land sales. If you sell land people will focus on land(and subsequently a high $55-$65 NAV. If you just sell oranges then people will focus on oranges and thats less cheap but still quite attractive at basically 7-10x conservative assumptions. They have moat in that scale here matters. They've got a long standing relationship and contract with Trop. They've also ventured into the management side of things. Basically, with all the issues facing orange groves, it sucks to be a little guy. And its good to be the top dog. 

 

Otherwise, Im looking to add today and tomorrow. After the extended drama with Trefelet, the price action, volume change, etc...would not be shocked to see a form 4 filed tomorrow after the close. In one of the strange behavioral aspects of the "smart money", when there's a forced/desperate big seller, they scatter like cockroaches even though Ive always found it to be opportunistic to buy. 

[griezeman23]

On 6/17/2021 at 11:57 AM, Longnose said:

Ive been digging into ALCO too. I admit I havent had time to do my own thourough analysis. but the VIC write up that was mentioned and the article on Seeking alpha made enough solid points that its at the top of my list as soon as I can carve out some time to read through the 10K's and start making my own judgement if it is a solid investment. 

 

I will admit it may be a bit out of my circle of competence. Also, it would seem they are kind of a commodity producers. If so, are they the lowest cost producer? I believe the VIC article made some mention of this.

 

Then my question if they are in the commodity business is my only downside protection the cheapness of the assets? That would make me weigh my analysis more on the NAV side which seems to be the most compelling argument anyway. 

 

I'd love to see some more conversation around ALCO and the business model. Do they have any hidden moats? They've been around a long time and seems like they may have been mismanaged for a signifigant portion of their life. New CEO finally gets it and pulling these guys up and out?

 

Where is ALCO 5 - 10 years from now??

I'd be surprised if there's any hidden moats - unless you count their expansion into grove management services (think hotel management but for citurs groves). New CEO / CFO definitely get it. CEO is former Bear Sterns.

 

5-10 years from now, grove management services manages a similar acreage to Alico's today. Alico produces 10mn+ boxes annually.

 

Not sure this is a buy and hold forever (biggest driver of earnings is citrus pricing, which is not really set by the FL producers - moreso by non-US based citrus producers). More a special situation given that land sales are accelerating and growth capex is over after this year allowing all excess FCF get returned to shareholders. Longer term, I do worry about int'l competition + citrus greening - if you want to hold 4ever.

 

@Gregmal largely agree. Did I read it right on the Q2 call that management seemed to want to get most of the ranch land sold by year end? They did do a 15kish block just last month, which was ~1/3rd of the ranch land...