Andy Batts
Long only, value, growth, momentum

Forestar Group: The Discount To NAV Won't Persist For Long

Investment Thesis

The shares of Forestar Group (NYSE:FOR) are trading at ~30% discount to the company's NAV. The company operates in three business segments: real estate, oil and gas, and other natural resources. Forestar has a rich portfolio of assets and businesses, including 133,000 acres of real estate; 752,000 acres of oil and gas properties; 1.5 million acres of water rights; and 275,000 acres of timberland.

After adjusting for inflation and the company's strategy to reinvest the cash generated by its operations, the current valuation of its assets net of debt could be much higher (I believe ~10% higher) than the NAV as of December 31, 2012, which was $1.05 billion or $30 per share (see the table...

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