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Investing in Land Stocks

6 Land Stocks to Safeguard your Portfolio

Written by Luke Burgess
Posted February 19, 2010

It's a commodity more important than gold or oil... A resource that provides our most basic needs... An asset in very limited supply: land.

Over the years, I've allocated a portion of my portfolios to land-rich companies. Typically, these are not pure land plays; they have other operating businesses that may or may not be connected to their land holdings.

These include public companies in the timber, coal, mineral, and agricultural industry. With such businesses, investors are not dependent on the companies converting their land into cash for success, but still get the benefit of owning the land asset.

Investing in these land-rich stocks have some benefits over acquiring physical land itself. Shares of stock are much more liquid and brokerage commissions are a hell of a lot lower than insurance premiums and lawyer fees.

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Here are a few ideas to help get you started...

Investing in Land Stocks

Tejon Ranch Company
NYSE:
TRC
Stock: $31
Market Cap: $523 Million
Land Asset: 270,000 acres
Location: California
Market Cap / Acres: $1,937
Website: www.tejonranch.com

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Tejon Ranch was founded in 1843 as a Mexican land grant. In the decades that followed, the ranch grew in size as additional land grants were purchased by Tejon’s founder, General Edward Fitzgerald Beale, a historic figure in early California.

Today, Tejon is a diversified real estate development and agricultural company whose principal asset is its 270,000-acre land holding located approximately 60 miles north of Los Angeles and 25 miles south of Bakersfield.

The company generates operating revenue from land entitlement and development, commercial leases, marketing of real estate projects, oil and mineral production, utility easements, recreational activities, and filming locations. Tejon also generates revenue from farming almonds, pistachios, walnuts, and wine grapes.

Cresud, Inc.
NASDAQ:
CRESY
Stock: $13
Market Cap: $651 Million
Land Asset: 1.2 million acres total, 800,000 acres undeveloped
Location: Argentina
Market Cap / Acres: $543 total, $814 undeveloped
Website: www.cresud.com.ar

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Cresud is one of Argentina's largest agricultural companies. They raise beef and dairy cattle and grow corn, soybeans, sunflowers, and wheat.

The company is also one of the largest landowners in Argentina. Cresud has about 1.2 million acres of land, of which 400,000 acres are in productive use.

The company leases its land out to other agricultural companies including Tyson Foods. Cresud also owns stakes in a couple of other publicly traded companies, including a 60% stake in the Argentine land company IRSA and a 20% stake in Brasilagro.

PICO Holdings, Inc.
NASDAQ:
PICO
Stock: $33
Market Cap:
$740 Million
Land Asset: 440,000 acres
Location: Nevada
Market Cap / Acres: $1,681
Website: www.picoholdings.com

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PICO Holdings is primarily engaged in the ownership and development of water resources and water storage operations in the southwestern United States.

The company currently owns about 440,000 acres of land in Nevada that were originally part of 1.2 million acres of former railroad land that PICO purchased in 1997. The company has strategically sold off nearly two-thirds of its original 1.2 million acres over the years, but it still owns water (and other rights) on more than 1 million acres.

The company also develops and sells real estate and related mineral and water rights, as well as leases properties for grazing and agricultural uses. PICO is additionally focused on the acquisition, ownership, and development of residential lots, primarily in California. The company owns or controls more than 500 finished lots and 3,100 in various stages of entitlement — plus 1,400 residential lots on 244 acres in Monterey. PICO also owns two insurance companies that are currently in run-off.

Plum Creek Timber Co, Inc.
NYSE:
PCL
Stock: $37
Market Cap: $5.99 Billion
Land Asset: 7 million acres
Location: Diversified U.S.
Market Cap / Acres: $855
Website: www.plumcreek.com

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Plum Creek Timber owns and manages timberlands in the United States. The company's products include lumber, plywood, medium density fiberboard, and related by-products like wood chips.

Plum Creek Timber is also the largest private landowner in the United States. The company controls over 7 million acres of timberland in 19 states with large land holdings in Florida, Maine, Montana, and Wisconsin.

The company also operates a wholly-owned residential development business that builds homesites.

TimberWest Forest Corp.
TSX:
TWF.UN
Stock: $5
Market Cap: $397 Million
Land Asset: 796,000 acres
Location: Vancouver Island
Market Cap / Acres: $498
Website: www.timberwest.com

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TimberWest is Canada's largest private timber and land management firm. The company manages its assets for long-term sustainability to assure a steady and continuing flow of high quality timber and cooperation with its neighboring communities. About 85% of TimberWest’s production of Douglas-fir and hemlock is second growth. The company also harvests a mixed inventory of wood including western red cedar and balsam.

TimberWest is also Western Canada's largest private land management company. The company owns 796,000 acres of timberland on Vancouver Island. TimberWest also has a residential real estate development subsidiary.

Texas Pacific Land Trust
NYSE:
TPL
Stock: $28
Market Cap: $275 Million
Land Asset: 965,000 acres
Location: Texas
Market Cap / Acres: $285
Website: www.tpltrust.com

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The Texas Pacific Land Trust was created in 1888 after the bankruptcy of the Texas and Pacific Railway Company. Holders of Texas and Pacific Railway Company bonds received 3.5 million acres of land in Texas which had been earned by the railroad and pledged as security against bonds. The bondholders created the Texas Pacific Land Trust and converted bonds to shares of proprietary interest in the Trust, which was created to manage and sell the land.

After 122 years, the job is still only 70% complete. The Trust is one of the largest landowners in Texas with around 965,000 acres located in twenty different counties. Texas Pacific Land Trust generates revenue from land sales, grazing leases, easements, as well as a perpetual oil and gas royalty interest in some 387,000 acres.

Good Investing,

luke_signature.gif

Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire

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