Frank Voisin is the author of the popular value focused website Frankly Speaking, found at http://www.FrankVoisin.com
I recently came across a post at Journal of Value about Griffin Land & Nurseries, Inc (NASDAQ: GRIF) that alleged GRIF’s real estate had more value than GRIF’s enterprise value. This is quite a claim considering the company carries its real estate at $116.3 million and has an EV of $186 million, so I thought I would look into it further.
First, what does GRIF do? It has two lines of business: a real estate division which owns and operates commercial and industrial properties as well as develops residential subdivisions in Connecticut and Massachusetts, and a landscape nursery business that supplies independent garden centers and wholesalers. Interestingly, the company also owns a 4% interest in a magazine publisher in the UK.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
The company has only a passing relationship with profitability and its free cash flow is weak. Furthermore, the company trades at a premium to book value and appears to utilize a fairly high level of debt for its performance (D/E of 0.6). I find none of this attractive, and would normally not spend a lot of time looking into this company. But then I came across the Journal of Value article, which showed the following data, taken from the company’s recent 10-K. First, the raw land holdings, which is land to be developed for residential use:
Second, we have land used for the nursery operations:
Finally, we have the company’s developed properties, which are for office and industrial uses: