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Shares of cotton and farming giant JG Boswell (OTCPK:BWEL), owner of an estimated 142,000 California acres, and another 30,000 in Australia, are in positive territory year to date in 2009, up 14% excluding dividends. That's still down substantially from $1000 range the company briefly touched in May of 2008.

The appeal of Boswell 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.

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 billion. ("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.)

The company held its annual meeting last month in Pasadena, and we recently obtained a copy of the company’s 2009 annual report. Here are the highlights for the year ended June 2009:

  • Current Price: $477
  • Avg 3 month volume: 430
  • Current Dvd Yield: 2.9%
  • Quarterly Dvd: $3.50/shr
  • 2009 Revenue: $339.034 million (down 7.6%)
  • Net Income: $22.15 million (+45%)
  • Diluted EPS/shr: $22.51 (+46%)
  • Current Assets: $303.407 million
  • Cash: $2.066 million
  • Total Assets: $800.701 million
  • Current Liab: $282.139 million
  • Short Term Debt: $158.630 million
  • Long Term Debt: $0
  • Stockholders Equity: $444.817 million
  • Shares Out: 976,301
  • Book Value Per share: $455.6
  • Market Cap: $455.61 million
  • Enterprise Value: $612.18 million
  • Enterprise Value/California Acre: $4311 (estimated)

2009 revenue fell 7.6% to $339 million, while net income jumped 45% to $22.70 (fully diluted). Boswell ended the year with $158.6 million in short-term debt and no long-term debt. Shares currently trade at book value, and yield 2.9%.

Based on just the California land, we estimate Enterprise Value/Acre to be about $4311, 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.

Many thanks to Jack Norberg, chairman of Standard Investment Chartered Inc., of Costa Mesa California, who we consider to be one of the foremost experts on high quality pink sheet stocks. Jack attends the Boswell annual meetings, and has been a great help with data, and as a sounding board on ideas.

We've also been compiling Boswell data for several years now, and will be posting 5 years of fundamental data for Boswell in the near future.

Disclosure: The author has a position in JG Boswell.

Source: JG Boswell: Former Giant Still Appealing