Value Investing

Reform PICO Now


  1. We want the PICO Annual Meeting to be held in April 2016.
  2. We want the Board of Directors declassified at the next annual meeting so that all directors stand for reelection annually.
  3. We want the three director nominees proffered by Central Square Management to be immediately placed on the Board: Anthony BergamoJames Henderson and Daniel Silvers.
  4. We want Director and Executive Compensation reduced and correlated with returns to shareholders.


  1. We want UCP sold.
  2. We want the most marketable Vidler water rights sold.
  3. We want Mendell Energy sold.
  4. We want the entire securities portfolio liquidated.


We want all proceeds applied to share repurchases (including the $7.8 million in Northstar Hallock escrow proceeds to be received by March 2016). Proceeds received en masse should be used for a dutch tender.

We are the long-suffering shareholders of PICO Holdings, Inc. (Nasdaq:PICO).

Over the last five years we have endured:

  • a 75% decline in PICO stock price
  • a 35% decline shareholder’s equity
  • a 42% decline in book value per share
  • cumulative GAAP losses of $7.48 per share

During this time, we have stood by while:

  • CEO John Hart received cumulative compensation of $25,563,540, for an annual average of $5,112,708.
  • Chairwoman Kristina Leslie received cumulative compensation of $799,325, for an annual average of $159,865.

When we sought change, Mr. Hart and Mrs. Leslie answered our pleas with:

  • A proposal to reincorporate PICO from California to Delaware
  • A refusal to acknowledge an unfavorable say on pay vote
  • A postponement of the annual meeting
  • An Investor Day, paradoxically closed to most investors, with Q&A censored
  • Retention of $1,000-per-hour attorney Keith Gottfried, a former member of the Bush administration (see his Wikipedia page) – at shareholder expense
  • Retention of an executive search firm – at shareholder expense
  • An insubstantial change to executive compensation
  • A “promise” to buyback shares
  • A meaningless appointment of a placeholder director

We, the shareholders of PICO, are fed up. We have suffered long enough. PICO shareholders have cumulatively lost hundreds of millions of dollars under the purview of this board.

This same corrupt and incompetent board, chaired by Kristina Leslie, seeks only to entrench itself. Kristina Leslie and the rest of the Board have been dishonest, deceptive, self-seeking and hapless.

PICO must be reformed now. See our plan.

pico holdings stock sp500 5 years

PICO Holdings share price has declined 75% in the last five years, while the S&P 500 has returned 48%.


Below is chronological review of PICO’s financial results over the last six years.


                            $18 MILLION NET LOSS


                             $11.2 MILLION NET LOSS


                               $54.5 MILLION NET LOSS


                                $29 MILLION NET LOSS


                                 $22.3 MILLION NET LOSS


  • $3.5 million impairment writedown: New Mexico water rights
  • $2.9 million impairment writedown: Real Estate
  • $46 million operating losses

                                  $52.4 MILLION NET LOSS


                                  $80.7 MILLION NET LOSS




PICO 1-Year

PICO share price performance – Trailing 12 months.

PICO Holdings, Inc. (Nasdaq:PICO), is a diversified holding company based in La Jolla, California. PICO Holdings has 3 consolidated subsidiaries and a securities portfolio.

Water Assets: PICO owns 100% of Vidler Water Company, Inc., which acquires and develops water resources and water storage operations in Nevada, Arizona, Colorado and New Mexico.

At September 30, 2015, PICO carried the tangible water assets at $42.518 million and the intangible water assets at $126.835 million, for total water assets of $169.353 million. However, the PICO 2014 Letter to Shareholders indicates that, “Considering market comparables, including all adjustments, and the current overall economic outlook in our markets, it is possible to arrive at a potential value for Vidler Water of approximately 2.2 times Vidler’s book value.”

Real Estate Assets: PICO owns 57.2% of UCP (NYSE: UCP), a homebuilder and land developer operating in California, Washington State, North Carolina, South Carolina and Tennessee. PICO formed UCP, LLC, the predecessor company to UCP, in 2007 to acquire finished and partially-developed residential lots in California and Washington State. In 2010, UCP, LLC formed Benchmark Communities, LLC to design, construct and sell single-family homes on lots owned by UCP, LLC.

On July 23, 2013, in an Initial Public Offering, UCP floated 42.8% of its shares at $15 per share, which left PICO with a 57.2% stake.

On April 10, 2014, UCP acquired Citizens Homes, Inc., a residential homebuilder in North Carolina, South Carolina and Tennessee. The purchase price was $14 million with $6 million in potential earnouts. According to PICO, the “Citizens Acquisition provides increased scale and presence in established markets with immediate revenue opportunities through an established backlog. Additional synergies are expected in the areas of purchasing leverage and integrating the best practices in operational effectiveness.”

Oil & Gas Assets: PICO owns and operates Mendell Energy, LLC, an oil and gas venture operating in the Wattenberg Field in Colorado that has drilled and completed four wells. Mendell owns over 400 acres of oil and gas leases in the Wattenburg Field and owns over 600 other acres of oil and gas leases in Wyoming.

In 2014, PICO recorded a $4.4 million impairment loss on Mendell, reducing its carrying value to $1.7 million. In the first 9 months of 2015, PICO recorded Mendell impairments of $1.8 million, which, when netted against 2015 investments, produced a carrying value of $2.5 million at September 30, 2015.

Securities: PICO owns the following securities.

(1) Synthonics: PICO owns $2.2 million of preferred stock, representing an 18.3% voting interest, in Synthonics.

Kenneth J. Slepicka, a PICO director, co-founded, and is currently the Chairman, Chief Executive Officer and acting Chief Financial Officer of Synthonics. During 2014, PICO extended a $450,000 line of credit, at 15% annual interest, to Synthonics. The outstanding balance and accrued interest was repaid in April 2015.

(2) Mindjet: At December 31, 2014 PICO owned 28.4% of the voting stock of Mindjet (comprised of common stock, several series of preferred stock, and convertible debt) and held one board seat out of six. Mindjet, of San Francisco, California, is a privately held company that provides business innovation software. Mindjet markets its products worldwide and has offices in the US, Germany, France, Japan, Australia, and the UK.

At December 31, 2014, PICO carried Mindjet at $25.1 million, with an “estimated fair value was $32.9 million.” In 2015, PICO recorded a $20.7 million impairment loss on the Mindjet investment, leaving $1.3 million in value on the books.