7 replies to this topic

[PorkLoin]

Here is a stock that I'd forgotten about, until I got filled on an old order to buy late last week. Long-term I like the "water sector" -- companies that sell water, filter it, pump it, pipe it, and make the equipment to do so. PICO's best attribute, IMO, is their water business.

Any and all comments welcome, and I'm interested in getting together a "basket" of water-related stocks for companies in the US and worldwide. Billions of people around the world need more water for irrigation, clean water, drinkable water, and I think going forward in time this sector is a winner.

Some other stocks: PHO is PowerShares Water Resources Portfolio. CWCO, LNN, MWA, SJW, WTS.


From the company website:

PICO Holdings, Inc. (NASDAQ: PICO) is a diversified holding company based in La Jolla, California.

PICO seeks to acquire businesses and interests in businesses which our fundamental analysis of assets, earnings, and cash flow indicates are undervalued. We are most interested in long-established businesses, with a history of operating successfully through industry cycles, recessions, and geo-political disruptions, in basic, "old economy" industries. Typically, the business will be generating free cash flow and have a low level of debt or, alternatively, strong interest coverage ratios or the ability to realize surplus assets. As well as being undervalued, the business must have special qualities such as unique assets, a potential catalyst for change, or be in an industry with attractive economics. Selected acquisitions will become core operations. We are also interested in acquiring companies where the real value is in land and other tangible assets, rather than in its operating business.

Our largest business, Vidler Water Company, is a significant private sector owner of water resources and water storage assets in Arizona and Nevada. We develop new sources of water for municipal and industrial use, and storage infrastructure that is necessary to facilitate the efficient allocation of available water supplies. Vidler’s operations are concentrated in Nevada and Arizona, arid states which are leading the country in population growth and new home construction.

Our other major businesses are:
Nevada Land & Resource Company, LLC, which is the largest private landowner in the state of Nevada. Nevada Land owns approximately 767,000 acres of land in northern Nevada, and the mineral rights and water rights related to the property;
“running off” its historical property and casualty loss reserves of Citation Insurance Company; and
“running off” its medical professional liability loss reserves of Physicians Insurance Company of Ohio.

[dasein]

just to be devils advocate, since technically, it looks positive, but all that land in Nevada - how much of what minerals are there? I thought Nevada had to import water, and that the groundwater level is receding??? I have looked at the water fund you mentioned, and I think the companies are more about the water play spin, than about the reality. Is Quebec Hydro listed? that is the best of both worlds, Id think??? Karen

[PorkLoin]

just to be devils advocate, since technically, it looks positive, but all that land in Nevada - how much of what minerals are there? I thought Nevada had to import water, and that the groundwater level is receding???

I have looked at the water fund you mentioned, and I think the companies are more about the water play spin, than about the reality.

Is Quebec Hydro listed? that is the best of both worlds, Id think???

Karen,

I don't know what is there as far as minerals, but the water supply versus the population and population growth in Nevada and Arizona is a big deal. Regardless of what water is there, PICO's Vidler Water Co. has a substantial amount of it, and is trying for more. Yeah, there are mineral rights for much of the held land but I have no idea what value that represents. I see the water as the most immediate deal, and even there it's a long-term view that prompts me to like this stock -- the last P/E I saw for PICO was like 71.

PICO is (slowly) getting some notice. It finally got an analyst, Merriman Curhan Ford, to initiate coverage, just last Sept. 29. "Buy." (YeeHaa.)

Vidler is pretty good at taking water formerly devoted to agriculture (or other lower-paying stuff) and directing it to companies and towns that pay higher rates. I don't know if the groundwater is receding, but it would make sense to me if that's the case. NV and AZ are growing fast in population and it strikes me as ridiculous to see all the green golf courses in the Phoenix area. Bottom line for me, albeit it on a fundamental basis, is that I expect water to get more expensive out there in the west.

I don't own any other water companies at present. Used to have CWCO, and it had had a monstrous run. Sold at 27 half a year ago and that's the area it's at today. Don't know the other PHO companies, although I expect Watts - WTS - is the maker of valves and maybe etc. I've used a lot of Watts ball valves over the years.

Haven't done much on assembling a portfolio of water companies. Just too lazy, and I hear you about hype versus reality. Worldwide, I do believe the demographics and water situation is compelling, but that doesn't mean there is any big move coming soon in the stocks. The companies I see benefitting go from the small-caps (some of which would be the big gainers if my scenario is right) to General Electric, which is doing a LOT in the world water arena.

I spent 2 or 3 years of my life working for Hydro Quebec, during the 9 years I was in Canada. Massive power company, and the name sure sounds like water is involved, but in Canada electric utilities are commonly called "the hydro" or similar.

In checking I now see that 95% of H-Q's power comes from hydroelectric generation, so I stand corrected. H-Q puts out 13% of the power generated in the whole world from it. Whew. You can buy debentures or medium term bonds but H-Q is a governmental entity and the stock isn't listed since it's a "crown corporation."

Hydro power is good, clean/renewable but I see H-Q as massive and massively ossified behind the impetus of Francophone nationalism and general governmental/bureaucratic baloney. Times are good in Canada and H-Q (and Quebec itself) usually gets more than it's share but despite the advantages I think it's really just a protected, monopolistic behemoth. Tell you what, I never saw so many non-productive people employed in one place. Sinecure City.

For electric power generation I like some of the royalty trusts, though - Calpine, Boralex, Great Lakes Hydro. I have those, and there are others.


Best,

Doug

[PorkLoin]

The volume has me a little suspicious, but the water sector continues to look good to me. Worldwide depression would change that. For very long-term considerations, if we would have much of an economic slowdown and a stock market decline, I'd certainly be looking for water sector stuff when I thought it was over.




Mentioned this one a few times over the years. Been a great long-term hold. Business continues to be good.

"Brookfield is an asset manager focused on property, power and other infrastructure assets with over US$50 billion of assets under management.

We own and manage one of the largest portfolios of both premier office properties and hydroelectric power generation facilities as well as transmission and timberland operations, located in North and South America and Europe."

Depression, keepeth theyself away!




Bought this one at 14.92 on that crazy day in February of last year. Telstra was having problems with the Australian gov't even though the gov't was the biggest shareholder. Patience has paid off a little, but I'm about fed up with it. The money would have served me better in uranium stocks.

In those uranium issues, it's a fairly quiet time for the most part. I'm worried about AZM.V and UEX.TO. Still a bull market?

Most of the stocks had a big move up in Oct. through Dec., and have been going sideways. Most are looking good for the long term.

FRG, FSY.TO, LAM.TO, STM.V - been doing great. Zoom! New High City. I hadn't bought FSY.TO until Dec. 19 (posted about it on the FF board that morning) and it's up 109% now, in 24 trading days or so.

Some of the most speculative ones too -- DIT.V, NWI.TO, PTU.V, and WRI.V. Mentioned before and they're up an average of almost 400% since October when U stuff started moving again in general. VERY RISKY and I would not buy them right now unless one is looking at the very short term.

Overall just a time to keep on keeping on with uranium stuff in my opinion. Spot price has held steady now for some weeks....

Best,

Doug

[PorkLoin]

PICO closed today @ 43. Nice.

[PorkLoin]

Sold half my position today. MACD looks to be weaking, at least short term. Sweet trade from 31.50.

Longer-term, I remain very bullish on the water resources sector.


Doug

[SilentOne]

doug, Nice job on PICO. I'll be watching the water space as I agree LT it is a good investment theme. cheers, john

[PorkLoin]

Thanks, John. At the other end of the spectrum for water is General Electric. I wish the water processing part of GE could be owned without the dilutive other aspects.... Best, Doug