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… and sometime you don’t.
The dividend has been cut, the company’s shares have been delisted, and its unit price has been decimated. Is now the time to take another position in ML Macadamia Orchards LP?
While the answer from a contrarian perspective is yes, there is the possibility that the company’s business has been seriously impaired; that thanks to the sharp decline in mac nut prices the returns from farming nuts will not soon regain their former glory. Remember also that even if the U.S. dollar is about to fall (versus the Australian dollar) and U.S. grown mac nuts are about to become more competitively priced, an ominous question remains: will the increase in NNUT’s share price outpace the decline in the U.S. dollar? (a serious consideration for non-U.S. investors).
Not able to speculate on the longer-term value of the LP’s real estate holdings, a U.S. dollar decline and/or anecdotal evidence that macadamia nut prices are rising may be required before attempting to invest in NUTT. Back in late 2003 our research indicated that prices were rising and that NNUT’s share price and the trailing USDA macadamia nut data did not reflect this reality. Today mac nut prices are declining and no amount of investigation suggests that a price rise is imminent.
These negatives have not been enough to stop former Quark boss, Fred Ebrahimi, from aggressively accumulating the stock. As of this weeks purchases Mr. Ebrahimi owns more than 32% of the outstanding units, up from 10% at this time last year. Mr. Ebrahimi has remained silent on what his intentions are for many years.
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Macadamia nuts: Acreage, yield per acre, production (in-shell), season-average grower price, and value, Hawaii, 1980 to date
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Year
|
Bearing acreage
|
Yield/acre
|
Production
|
Grower price
|
Value
|
|
|
Acres
|
Pounds
|
1,000 pounds
|
Cents/pound
|
1,000 dollars
|
|
1980
|
10,000
|
3,339
|
33,390
|
72.4
|
24,174
|
|
1981
|
10,000
|
3,346
|
33,360
|
79.3
|
26,454
|
|
1982
|
10,200
|
3,600
|
36,720
|
73.9
|
27,136
|
|
1983
|
10,600
|
3,440
|
36,420
|
65.7
|
23,928
|
|
1984
|
12,000
|
3,140
|
37,700
|
69.2
|
26,088
|
|
1985
|
13,500
|
3,110
|
42,000
|
72.5
|
30,450
|
|
1986
|
14,400
|
3,060
|
44,000
|
80.0
|
35,200
|
|
1987
|
15,600
|
2,740
|
42,700
|
84.0
|
35,868
|
|
1988
|
16,600
|
2,740
|
45,500
|
90.0
|
40,950
|
|
1989
|
18,200
|
2,770
|
50,500
|
89.0
|
44,945
|
|
1990
|
18,400
|
2,720
|
50,000
|
82.0
|
41,000
|
|
1991
|
18,200
|
2,720
|
49,500
|
70.0
|
34,650
|
|
1992
|
17,500
|
2,740
|
48,000
|
68.0
|
32,640
|
|
1993
|
18,500
|
2,620
|
48,500
|
68.0
|
32,980
|
|
1994
|
18,500
|
2,840
|
52,500
|
69.0
|
36,225
|
|
1995
|
19,300
|
2,640
|
51,000
|
74.0
|
37,740
|
|
1996
|
19,200
|
2,940
|
56,500
|
78.0
|
44,070
|
|
1997
|
19,200
|
3,020
|
58,000
|
75.0
|
43,500
|
|
1998
|
19,200
|
2,990
|
57,500
|
65.0
|
37,375
|
|
1999
|
18,900
|
2,990
|
56,500
|
67.0
|
37,855
|
|
2000
|
17,700
|
2,820
|
50,000
|
59.0
|
29,500
|
|
2001
|
17,800
|
3,150
|
56,000
|
59.0
|
33,040
|
|
2002
|
17,800
|
2,980
|
53,000
|
57.0
|
30,210
|
|
2003
|
17,800
|
2,980
|
53,000
|
61.0
|
32,330
|
|
2004
|
17,800
|
3,170
|
56,500
|
73.0
|
41,245
|
|
2005
|
18,000
|
3,000
|
54,000
|
81.0
|
43,740
|
|
2006
|
15,000
|
3,870
|
58,000
|
67.0
|
38,860
|
|
2007
|
15,000
|
2,400
|
36,000
|
58.0
|
20,880
|
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Purchased for Wish List
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http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1113
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