PICO Remains Well Capitalized

Nov.19.08 | About: PICO Holdings (PICO)

PICO (NASDAQ:PICO) reported Q3 revenue of $9.1 million, nearly double same quarter last year, and net income of $533K, up 12%. The bulk of Q3 revenue was from a gain on the sale of the company's remaining interest in 30,000 acre feet of water storage capacity, which it sold for $11.7 million.

The company completed the Fish Springs Ranch pipeline project in July, and now has 8000 acre feet of water for sale. PICO also sold its first acre foot (one water credit) of Fish Springs water for $45,750. Although this project offers the only new source of water available to developers in the Reno area, the struggling Nevada real estate market has slowed PICO's progress.

Still, PICO remains well capitalized, and has ample liquidity ($140 million in cash, or nearly $7.50 per share) to weather this storm. Debt also remains low at $28.2 million, and the company is currently trading at just .82 times book value, and 14 times trailing earnings.

PICO shares are now down 35% year to date and 55% from the 52 week high ($48.24) hit in early September. The drop is primarily related to the major asset repricing we've been experiencing in the markets--that's a nice way of referring to the great "panic" of 2008.

We've seen many companies punished beyond belief by the forced selling we are still experiencing, and believe that this will ultimately provide some of the greatest opportunities of this generation. That's if you have the stomach for it. Stay tuned.

Disclosure: The author has a position in PICO Holdings.