Bill Gates Has Significant Holdings Of U.S. Private Farmland – Should You?

A recent report shows that Bill and Melinda Gates are one of the largest owners of farmland within the United States. The Microsoft linked billionaire and Melinda Gates have been able to gather over 200,000 acres of arable land. It is certainly an intriguing report, especially in these times, where people all over the world have seen a disruption of supply chains due to the pandemic and other situations.

Remember back in March and April when food shelves at grocery stores were not fully stocked like we expect it to be in normal times? Government programs like the PPP and other assistance programs ruled the day.

It might have made some of us think about self-sustaining lifestyles and how much work it would be start growing our respective food. Conversely, others might have thought about how fun it would be to have a keen watch over the different seasonal fruits and vegetables.

This is definitely an exciting report as it shows that even billionaires are thinking about the food supply paradigm. The previous leader of Microsoft has land holdings in over ten states with significant holdings in the heartland and in the southern states. These states include Louisiana, Phoenix, and even Nebraska.

If you take a glance at the report, you will notice that he has transitional real estate holdings within his farmland portfolio.

But what made different journalists and reporters start looking into these farmland holdings? One specific reporting organization started paying attention around late 2017, when they found out someone purchased over 13,000 acres of farmland in the Washington State area.

Gates uses his wholly-owned, private financial entity for these holdings. Sorry, MSFT holders, you do not have direct exposure to rising land values. This financial entity also investments varying from technology startups to other firms.

Representatives of Cascade Holdings, the Bill Gates owned entity, note that they are interested in sustainable farming.

This makes sense, as Bill Gates and Melinda Gates seek to tackle big problems ranging from vaccinations to clean water and sustainable energy.

What is Sustainable Farming

The Bill and Melina Gates Foundation and their pursuit of sustainability lead to sustainable farming. They even have a specific philanthropic group that revolves around enabling emerging farmers in different areas around the world with new knowledge and systems to farm sustainably.

Did you know that Gates is also an investor in startups like Impossible Foods? It is certainly not a surprise as the firm seeks to create products in a more lean and sustainable way.

But what is sustainable farming?

Sustainable farming revolves around farming practices that help to preserve

• The ecological systems
• The environment
• General Health
• Animals

Sustainable agriculture enables holistic food production by preserving others’ option to farm and live for centuries to come.

These practices will revolve around crop rotation, plant diversity, the utilization of modern technologies and information, and recycling to ensure farming longevity.

Now, if you are interested farming, you can learn more about from this book and this one on getting started with farming. But what if you want to invest in farmland differently, what stocks should you purchase?

Potential Farmland Stocks To Add To Your Portfolio

First, why would you want to own farmland stocks? The primary point is that the agricultural industry is not going out of business anytime soon. I don’t know about you, but many people still enjoy regular burgers and superb steaks cooked to perfection.

The agricultural industry provides value in more ways than food; it has been around for more than 10,000 years and will still be a staple for centuries to come. That is, until scientists figure out how to make a pill that equates to a meal. Even in this future Brave New World era, wouldn’t people seek variety?

Indeed, the global population does continue to grow, and the agricultural industry will be critical in providing the food that matters for overall health.

Remember that demand is perpetually present for the agricultural industry. It has been around for a while and will likely be robust throughout the next century. Finally, technology should help to make it more robust.

Here are a few of the primary farmland stocks you can take advantage of today. If you feel that they are right for you, add them to your portfolio to obtain more farmland exposure.

You can start with individual stocks or exchange traded funds that have exposure to farmland, like  iShares MSCI Agriculture Producers ETF (NYSEMKT:VEGI). This way you are diversified and do not have to worry about the prospects of one single company when trying to have farmland within your portfolio.

Now for a few individual stock options.

John Deere (DE)

If you are farming, then you know of John Deere. The stock has gone up over 4 times over the course of five years. That means a hefty concentration of value into John Deere would have yielded significant returns. Now, at the present moment, Deere has a significant price to earnings ratio of over 30. Still, many think that it is a great long-term play.

The firm has been around since 1837 and it seems like it does have a healthy balance sheet and should not have significant shocks to earnings. This firm may not own the land but farmers, who may own land, certainly will use several products from this firm.

It may be a good bet for the next few years.

What else?

Archer-Daniels-Midland (ADM)

The ADM corporation is involved in the agriculture sector and it purchases yield from farmers. It will then take these crops and process them for different purposes and bring it right back to the market. With its expertise in agriculture and overall commodities, this brand may serve as a fantastic way to have exposure to the world of agriculture and farmland while accounting for inflation risks. Indeed, just like with other companies on this list, you can take advantage of a compelling dividend as well. Individuals appreciate this brand because of its robust financials and secure earnings.

Beaver Coal Corporation (BVERS)

What? I want to invest in farmland, you say. Why are you giving me a coal company? Well, it is not genuinely a coal company. This dark stock, a stock where you do not have as much information on, is a firm, that describes itself as a land company based in Beckley, WV. The firm has over 50,000 acres of natural resources and provides lease opportunities, according to its website.

It earns income through various ways, these include : residential development, mini-storage rentals, tourist property rentals and other commercial ventures, according to the company. Essentially, they allow others to make use of the land.

We have minimal information on the number of stocks that float on the market, regular earnings, balance sheet information, and other aspects. But we do know that the firm has been providing dividends for over ten years and we do know that they do offer property tours. This is kind of a speculative play because it meets the criteria, but it is dark, very dark, in that you have minimal information as to what happens within the company.

We do know that at least one institutional investor, has a small portion of assets (over $3,00) present within this company.

Bayer

Bayer recently acquired Monsanto. Many people shudder just to think of that vilified name, Monsanto. Indeed, Bayer, an agricultural and bio-sciences company has been around for over fifty years. It is seeing some negative headwinds due to legal issues and other factors. The firm is facing claims from many individuals who may have gotten cancer due to repeated exposure to products the firm sold.

At the same time, it is diversified and is invested in healthcare, food, and other industries.

It is a scary stock because you do not know if it will be able to increase revenues sufficiently over the next few years. You also do not know if it will be able to quickly move past current legal issues and change its operations. That is definitely why it is on sale at the present moment.

Investors who purchase this stock must ask themselves if they are falling into a value trap or if they are seeing an opportunity that others do not.

Texas Pacific Land Trust

This is a trust that owns over 900,000 acres of land in the Texas Permian Basin. It is a pretty intriguing company with zero debt, good free cashflow, and a strong dividend. But the problem is if it will continue to remain robust as it gains a majority of value from leases. But with over 900,000 acres with wonderful farmland properties, it is a great one to look into if that is what your are optimizing for within your portfolio.

Other Opportunities

You can also check out the Mowi ASA ADR,

FMC, Nutrien, Bunge, and Tyson. These firms are not only notable mentions but can serve a solid role in your long-term portfolio.

Disclaimer: These are suggestions, not investment advice.