Are You Betting The Farm Super Bowl Weekend?
Investors surely welcome the weekend events of Super Bowl Sunday after a rough Friday, which saw the DOW plummet -665 points. What caused the slide is up for debate, as the job report showed 200,000 new jobs were added, but the talk and focus on main stream media has been the release of the “memo” by Washington against the FBI’s and DOJ’s wishes.
Regardless, the chaos in Washington, DC, has clearly added to the uneasiness on Wallstreet. Small cap investors share a similar sentiment as they seek clarity on where to throw their sideline money. There is no “hot” sector at the moment. Cannabis and Crypto stocks have settled down since the first of the year, Oil and Gas plays are dead, and Tech/BioTech is always hit or miss depending on the story. This leaves the question…what does one do? Like picking the Super Bowl winner, what team does one take?
What we do know is over 110 million viewers will tune in to watch Sunday’s game where the New England Patriots take on the Philadelphia Eagles at 6:30 EST on NBC. Many will still watch the game even though their “favorite” team is not playing simply because they love the game of football, the witty commercials and the opportunity to celebrate the event with friends and family.
Many can’t pass up betting on the game. The latest reports out of Nevada show that sportsbooks took in more money in wagers on Super Bowl 51 than any Super Bowl in history at almost $138.5 million. These numbers do not include the friendly bets with friends, co-workers, or neighborhood bookies which most likely are equivalent to over $1 billion. The current line is New England -5 points with an Under/Over of 48.
Just as sports fans handicap who they will bet the farm on Sunday evening, investors have to get back to basics and handicap where to invest their money. When nothing seems to be hot, one show be looking for value, and positioning themselves for the next run. We have all heard the term “Betting The Farm” and “Money is Money”.
Money is money as in it doesn’t matter what sector the company is in, whether they are selling clothing, pharmaceuticals, memberships, oil, gold, CBD oil or whatever… what matters are if they are profitable, making money, revenues increasing, undervalued, have potential to grow and so on. Investors have to work a little harder and research a little deeper to find their next score.
As for “Betting The Farm”, that is when you put it all on the line, and I found an undervalued company who did just that. New Global Energy (NGEY) is a farm, who recently avoided diluting their share structure by getting a loan for $2.4 million against their farm’s assets. The company’s assets include 120 acres dived between two farms near Coachella Valley California. With the recent approval of Marijuana growers in the area land prices have started to move much higher with land comparables from zillow on the two properties listed on the loan agreement totaling $4.0 million in just land assets. Another asset on the farm is a .5MW solar array that is currently in operation providing power to the paddle wheels that aerate the water. The costs of solar have come down to about $1.00 per MW according to First Solar CEO, so the solar array is worth about $500K today. A majority of the excess power is sold back into the grid. The company also has about another million in property plant and equipment to run the farm as they need tractors, front loaders, trucks, tanks, netting, and fish nurseries.
The most obvious asset swimming around in the farm are about 4.0 million tilapia and each of them represents a $3.00 bill when they reach maturity. Aquaponics USA sells their tilapia for $6.00 per fish but in a different region. That’s right $12 million in potential revenue over the next 2 years and the company trades at a $500,000 market capitalization. Count up the assets $4.0 million in land, $.5 mil solar array, $1.0 million in equipment and at least $6.0 million in fish. That is $11.5 million of assets offset by $2.4 mil in debt. For the sake of simplicity the stock is trading at $.05 on the dollar of its $9 million “LIQUIDATION VALUE!”
Investors betting the Farm on the fact that people need to eat, people need electricity, and that farmland will appreciate could do very well here. If you believe in those truths it’s hard to lose at these prices.