This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Misunderstood Stocks Can Stay That Way for Years

NEW YORK ( TheStreet) -- A conference last week in Arizona reminded me just how dry parts of our country and the world are, and how frequently I take water for granted.

Upon returning from my first mission trip in the Dominican Republic several years ago, a place where clean water is not easily accessible as it is here in the United States, I vowed to never again view a glass of clean, drinkable H2O as I once had. But human nature often takes over, and those stark reminders of just how fortunate we are to have an abundant supply of clean water, at least in the East, often fade away. But the desire to have some exposure to water in the portfolio remained.

Eleven years ago, I stumbled onto a little-known company, PICO Holdings (PICO - Get Report), a mini-conglomerate that I referred to as the "poor-man's Berkshire Hathaway". At that time PICO, an asset-rich business, owned among other things, a vast amount of Nevada land, a water business, and two insurance companies. It was a misunderstood company with valuable assets; a value investors' dream.

It turned out to be a great purchase as shares more than quadrupled between late 2002 and early 2007, as institutions and investors caught onto the story. But the great market meltdown of 2008 punished PICO severely, pushing it into the high teens. Five years later, shares stand at about $22.50, up less than 25% since bottoming. Unlike most positions that I take, I have been in and out of PICO several times over the years.

The company has changed since I first purchased shares. The 1.2 million acres of Nevada land has been sold, as have the two insurance companies. My primary reason for owning shares, however, the water resource and storage operations, Vidler Water Company, remains, and this is arguably the company's most valuable asset.

In 2008, seeking to capitalize on the residential real estate bust, PICO formed UCP (UCP), which acquired developable land, developed lots and finished lots in certain California and Washington markets. That business generated about 39% of total 2012 revenue. This past July, PICO took UCP public, selling 42% of its stake, which raised $108 million. PICO's stake is worth about $63 million
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PICO $9.98 0.00%
AAPL $93.34 -1.60%
FB $116.40 -0.28%
GOOG $692.15 0.16%
TSLA $238.23 -3.80%


Chart of I:DJI
DOW 17,711.01 -119.75 -0.67%
S&P 500 2,056.42 -19.39 -0.93%
NASDAQ 4,762.94 -42.3510 -0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs