Water

Small Cap Water Play Of Top Emerging Manager With 120% Upside Potential

Water scarcity is one of the biggest issues the world faces today and some analysts believe over the next few decades, water could become the globe’s most valuable commodity.

Q4 hedge fund letters, conference, scoops etc

Indeed, according to the 2018 United Nations World Water Development report, almost 6 billion people are likely to live in areas that suffer water shortages for at least one month a year by 2050, up from 3.6 billion today.

With the world’s supply of fresh water limited, it is no surprise investors are rushing to put their money to work in the sector. But, opportunities for investment are relatively scarce. There are few listed companies that own water rights directly and most companies with exposure to the sector are trading at premium valuations.

However, emerging hedge fund manager Gate City Capital believes it has found an undervalued play on water that could offer an upside of 120% from current levels.
Undervalued water rights play
The firm profiles its idea in the Q1 2019 issue of Hidden Value Stocks (Value Walks quarterly publication which profiles two under the radar hedge funds and four value stocks (with little coverage) in each issue).

Here’s part of the interview. The full investment idea is only available for subscribers.

"XXX owns significant amounts of water rights and credits across the American southwest. In many cases, XXX invested significant capital to convert these assets for municipal or residential use and to build infrastructure to transport the water to the end user. XXX makes money by selling the company’s portfolio of water rights and credits to commercial and residential developers or be leasing its water assets to end-users.

Management has committed to monetize the company’s asset base and return proceeds to shareholders in order to appease shareholders following years of poor equity performance. Since 2017, XXX has paid a $5/share cash dividend (approximately $116 million) and repurchased over $20 million in common stock. We expect the company to continue to return significant capital to shareholders as the company monetizes additional water assets.

We have a target valuation for the company of $480 million or approximately $22.50/share. We arrive at this valuation by valuing each of the company’s individual water assets. We have visited developments...and spoken to many of the area developers to gain additional comfort with our estimates of fair value. "

To discover which company Gate City is talking about, sign up to Hidden Value Stocks today. The full idea will be published at the end of this week along with a full-length interview with Gate City and another emerging manager, Breach Inlet.

As well as investment ideas like the one above, each newsletter subscriber receives direct access to the funds profiled as well as their quarterly updates and all historic issues of Hidden Value Stocks.

We have a special offer for new subscribers which expires on March 31.

You can sign up today for our yearly premium membership and cancel ANYTIME after our 5 day trial and pay ZERO also you will get our in depth studies on famous investors (several hundred dollars of value). Use code 15percent10 at checkout. Offer valid for next 10 subscribers or March 31, 2019, whichever comes first!

 

Article ends

SORRY!

This content is exclusively for paying members. Access all of our content on including years of timeless investment news and in depth analysis for only a few dollars a month by signing up here while also supporting quality content and journalism, or learn more about our premium content here

If you are subscribed and having an account error please clear cache and then cookies if that does not work email support@valuewalk.com and we will get back to you as quick as humanly possible


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Sign up for ValueWalkPremium today and get our exclusive content for 35% off.

Use coupon code vip19 or click on the button below

Limited time offer only ENDS 12/31/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others

 

0