Tuesday, 2 October 2007

JG Boswell Soars (BWEL)

Shares of cotton and farming giant JG Boswell, owner of an estimated 142,000 California acres, and another 30,000 in Australia, soared $73 today to an all-time high of $900 on volume of 251, and you guessed it, no news. We’ve owned BWEL shares for years, have reported on it several times in the past, but the company still remains somewhat of a mystery.

Certainly, the appeal of this company is not in its farming operation, which although impressive in its own right, merely represent the current use of assets which might ultimately be much more valuable used for other purposes. The company continues to develop its Yokohl Ranch project, a master planned community in Tulare County California, but the real gem may lie beneath the land: massive amounts of water that may be worth several billions. "May" being the operative word.

We were fortunate to obtain a copy of the company’s 2006 annual report, which we are embarrassed to admit is the first one we’ve ever seen. (We have seen financial statements from the $325/share company tender offer documents circa 2002-2003)

Here are the Highlights for the year ended June 2006:

Price: $900
Dvd Yield: 1.56%
Revenue: $386.58 million
Net Income: $19.744 million
Diluted EPS/shr: $20.41
Current Assets: $196.741 million
Cash: $5.475 million
Total Assets: $616.957 million
Current Liab: $138.637 million
Short Term Debt: $80.8 million
Long Term Debt: $0
Stockholders Equity: $430.209 million
Shares Out: 956,759
Book Value Per share: $449.55
Market Cap: $861 million
Enterprise Value: $936 million
Enterprise Value/California Acre: $6591

Based on just the California land, we estimate Enterprise Value/Acre to be less than $6600, and that ignores any value in the Australian land. We hope to obtain a 2007 annual report, when available.

*The author has a position in JG Boswell. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.

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