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JG Boswell: The Most Interesting Small Cap You Never Heard Of

JG Boswell: The Most Interesting Small Cap You Never Heard Of

JG Boswell Company (BWEL.PK) is perhaps the most interesting micro cap company you never heard of.  This $700 per share, $650m market cap, non-reporting pink sheet company is the largest cotton farmer in America and known as the worlds largest privately owned farm.  The farming operation consists of ~150,000 acres (550km2) in Kings and Kern Counties just north of Los Angeles.  Most of this acreage rests on top of the dry Tulare Lake bed.  The company is known for its cotton production, but it is also the nations second largest processing tomato grower and packer.  The company is profitable and pays a dividend, not that you would know unless you know one of the less then 300 shareholders.

The company’s past reads like a novel, literally.  A book entitled, The King of California: J.G. Boswell and the Making of a Secret American Empire, was written about its founder.  The company was started in 1921 by J.G. Boswell, and later run by J.G. Boswell II who is credited for the company’s growth from 1952-1984 (died 2009). The JG Boswell Company is a semi-private company that doesn’t post public financials.   Legally, the company doesn’t need to because it has less than 300 shareholders.  You will not find much public information on the company besides local articles or industry articles written about the founder.  No company website, no press releases, no public financials.  In spite of this or because of this lack of transparency, the company has a cult following of sorts.

The only way you can even get a glimpse of what the company does financially is to become a shareholder, and I’ve heard that even the audited financials are not very detailed or descriptive.  The company earned roughly $31 per share last year, continues to pay a dividend (2% yield), so I can’t say the company is cheap per se.  This said I view BWEL as a land play/water rights play. Underneath the dry lake bed where BWEL grows its crops is an aquifer that could supply up to 3 million residents. The speculation around the company is that the water rights alone are worth several billion dollars on top of the land holdings and crop earnings.

BWEL has less than 1 million shares outstanding, which make the stock very illiquid (Average Daily Volume: 200 shares per day).   Surprisingly, the stock does have some institutional ownership.  As a full time micro-small cap investor, BWEL doesn’t exactly fit the normal growth profile I look for, but it’s such an interesting company I’m almost forced to pay attention to it.  The only way to pay attention to it is to own it.

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About Ian Cassel

Founder of MicroCapClub, Ian is a full time private investor focusing on micro cap companies. He lost a lot of money early on in his investing career in micro caps, which motivated him to learn from losing. Now he loses less. Ian created MicroCapClub as a place for experienced micro cap investors to share and discuss ideas.

5 thoughts on “JG Boswell: The Most Interesting Small Cap You Never Heard Of

  1. Impressive Ian.

    Well done.

    I had never heard of the company before and I am from Southern California.

    Will be interesting to see what happens if a bunch of us go over looking to do some more due diligence.

    CL

  2. Received the annual report yesterday. The company did $48.05 vs. $31.37 in diluted EPS. They book around $540. The company holds their real estate at cost. They have been trying to develop two residential communities which would partially be their “investment property”, but I have a hunch they have a loss from those communities due to the housing market. Management did not leave any comments or discussion, and the dividend is still at $3.50. Revenues were up while most of the costs were flat to down. They do use futures contracts to hedge their cotton, and forward contracts to hedge currency risk with their Australian operations. The company is VERY low key towards investors, and I figure that is why they are trading on the pinks. I think BWEL is a great non traditional inflation play, but an even better play on real estate. Since they carry their real estate at cost, I figure their book value, especially with how farmland has appreciated, is not appropriately valued.

  3. Just found this thread, I’ve been following BWEL for a number of years and have read King of California. If I’m not mistaken, there’s been some oil drilling on their property, as some of it may be a part of the Monterey Shale deposit. JG Boswell died a few years back and his son, who inherited the CEO duties is like in his 70′s, doubt there is a succession plan beyond him. If I’m not mistaken, valuation on just the CA land is ~$7-$8k/acre and you get Aussie land, water rights and the operating Co for free. There’s been talk that the water will soon be worth more than the cotton they produce and if the Co is ever broken up, they would MLP water assets.

    One of those great stories that I was too foolish to hold on to, since bid/ask is $50 wide and trades 20 shares a day.

    Can’t really get info on this company from Mongolia, all ears if anyone does.

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