Alico, Inc. (ALCO)

(Zen Buddha Silence by Marilyn Barbone)

(Image: Zen Buddha Silence, by Marilyn Barbone)

June 14, 2020

We continue with examples of Boole’s quantitative investment process in action.

Recently, we looked at the following companies:

Genco Shipping (GNK):


Tidewater (TDW):

TravelCenters of America (TA):

Teekay Tankers (TNK):

Ranger Energy Services (RNGR):

Macro Enterprises (Canada: MCR.V):

This week, we are going to look at Alico, Inc. (ALCO).  Alico is one of Florida’s largest citrus growers, with over 45,000 prime citrus acres.  Alico is the lowest-cost citrus producer in Florida.  The company has an additional 65,000 acres of land, 25,000 acres of which is being marketed for sale.  Alico has a market cap of $226 million, with $220 million of debt and $80 million of cash.  The current stock price is $30.13.


Step One

First we screen for cheapness based on five metrics.  Here are the numbers for Alico:

    • EV/EBITDA = 6.90
    • P/E = 6.30
    • P/B = 0.52
    • P/CF = 3.10
    • P/S = 1.95

P/B is based on liquidation value.  The company itself has estimated liquidation value at $49 to $69 per share.   The midpoint is $59.  See slide 5 in Alico’s most recent investor presentation:

Step Two

Next we calculate the Piotroski F-Score, which is a measure of the fundamental strength of the company.  For more on the Piostroski F-Score, see my blog post here:

Alico has a Piotroski F-Score of 7.  (The best score possible is 9, while the worst score is 0.)  This is good.

Step Three

Then we rank the company based on low debt, high insider ownership, and shareholder yield.

We measure debt levels by looking at total liabilities (TL) to total assets (TA).  Alico has TL/TA of 57%, which is decent.

Insider ownership is important because that means that the people running the company have interests that are aligned with the interests of other shareholders.  At Alico, insider ownership is approximately 15.3%.  This is pretty good.

Shareholder yield is the dividend yield plus the buyback yield.  At Alico, dividend yield is about 1%.  Buyback yield is negligible, so shareholder yield is about 1%.

Each component of the ranking has a different weight.  The overall combined ranking of Alico places it in the top 20 stocks on our screen, or the top 0.8% of the more than two thousand companies we ranked.

Step Four

The final step is to study the company’s financial statements, presentations, and quarterly conference calls to (i) check for non-recurring items,  hidden liabilities, and bad accounting; (ii) estimate intrinsic value—how much the business is worth—using scenarios for low, mid, and high cases.

Here is the company’s investor presentation from January, 2021:

Intrinsic value scenarios:

    • Low case: Alico may be worth 50% of liquidation value of $59 a share.   That’s $29.50, which is 2% lower than today’s $30.13.
    • Mid case: Alico is likely worth at least liquidation value of $59 a share.  That’s 95% higher than today’s $30.13.
    • High case: Not only has Alico made itself the lowest-cost citrus producer; but it has also increased its plantings over the past several years, which will increase their annual harvest.  Normalized earnings are about $40 million.  At a P/E of 18, Alico would be worth $96.13 a share.  That’s about 220% higher than today’s $30.13.



An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time.  See the historical chart here:

This outperformance increases significantly by focusing on cheap micro caps.  Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals.  We rank microcap stocks based on these and similar criteria.

There are roughly 10-20 positions in the portfolio.  The size of each position is determined by its rank.  Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost).  Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.

The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods.  We also aim to outpace the Russell Microcap Index by at least 2% per year (net).  The Boole Fund has low fees.


If you are interested in finding out more, please e-mail me or leave a comment.

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Disclosures: Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Boole Capital, LLC.