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Shares of cotton and farming giant JG Boswell, owner of an estimated 142,000 California acres, and another 30,000 in Australia, have been hit hard this year, just like most other companies. Shares can now had for $435, (if you can get them that is; average daily volume is just 322), nearly 60% below the 52 week high of $1000.

The appeal of Boswell (OTCPK:BWEL) is not in its farming operations, which although impressive in their 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 of 35,000 acres in Tulare County California which may have a 10 year life. The Eastlake project, a master planned community in Chula Vista, California is near completion.

But, as we've stated several times before, the real gem may lie beneath some of Boswell's land: massive amounts of water that may be worth several billions. ("May" being the operative word. Ultimately, in order for value to be realized, assets must be converted, or have a good probability of being converted into cash. Water is a touchy and political subject, especially in California, and given dire predictions about California agriculture by officials in the new administration.)

We recently obtained a copy of the company’s 2008 annual report, and here are the highlights for the year ended June 2008:

Current Price: $435
Current Dvd Yield: 3.2%
Quarterly Dvd: $3.50/shr
2008 Revenue: $366.494 million
Net Income: $15.31 million
Diluted EPS/shr: $15.57
Current Assets: $205.471 million
Cash: $4.451 million
Total Assets: $729.75 million
Current Liab: $218.678 million
Short Term Debt: $147.261 million
Long Term Debt: $0
Stockholders Equity: $463.349 million
Shares Out: 974,132
Book Value Per share: $475.7
Market Cap: $423.75 million
Enterprise Value: $566.7 million
Enterprise Value/California Acre: $3991 (estimated)

2008 revenue rose 8% to $366.5 million, while net income jumped 9.6% to $15.57 (fully diluted). Boswell ended the year with $147 million in short-term debt and no long-term debt. Shares currently trade at just .91 times book value, and yield 3.2%.

Based on just the California land, we estimate Enterprise Value/Acre to be about $3991, and that ignores any value in the Australian land. We continue to be intrigued by the Boswell story, especially at these prices. Buyer beware, though: Shares are difficult to obtain, information is scarce, and there is little liquidity.

Disclosure: The author has a position in JG Boswell.

Source: Highlights from JG Boswell's Annual Report