An Inflation Hedge Trading at a Huge Discount

I can’t remember what sent me down this path, but I’ve spent the last few weeks looking at farmland…

Not the romantic version with red barns and sunsets, but the financial version. Yield, cap rates, balance sheets, lease terms. The stuff that decides whether owning dirt through the stock market actually makes sense.

What I found actually got me a little excited as a value investor. In a market where most assets feel priced for perfection, you can still buy productive U.S. farmland at a clear discount to what third parties think it is worth. That alone is interesting.

It also helps that the backdrop is pushing in the same direction. The world keeps adding people, but we are not creating any new good farmland and a fair amount of what exists gets pushed into other uses.

Farmland behaves differently from most of what sits in a typical portfolio. Over long stretches it has earned solid returns with much lower volatility and a weak correlation to the usual stock and REIT benchmarks.

That is especially appealing to me right now, with the S&P 500 trading at what I would consider historically rich levels. If we finally get the kind of correction or drawn out bear market that has been missing for years, I would rather have some exposure to assets that tend to move less and do not live and die with the index.

Put together, you have a scarce, inflation sensitive asset that has been a steady, low-drama compounder. Seeing that trade at a discount is hard for me to ignore.

The nice part is you do not have to buy a farm, deal with tenants, or learn how to price soybeans to get that exposure. You can do it through two tiny, ignored REITs that exist almost entirely outside of the current narrative.

On paper, these are exactly the kind of names that should be trading at a premium today. They own scarce, productive land. They collect contractual rent from real operators. They have long runways that do not depend on AI, consumer fads, or zero rates coming back.

Instead, both trade below conservative estimates of net asset value. In my view, they ought to be above it.

I am not a farmer and I am not an expert on the industry. I come at this as a value investor who likes hard assets, decent managers, and a margin of safety. When you can buy a diversified pool of U.S. farmland at less than the land is appraised for, collect a reasonable yield while you wait, and let inflation quietly help you, that is worth a closer look.

Once it cleared that bar for me, I went back through the filings, presentations, and recent earnings of these two small stocks…

One leans more toward row crops and internal management, the other toward specialty produce and external management. Both own real acreage across multiple states, both lease it out on long term contracts, and both have spent the last few years repositioning themselves for a higher rate world rather than pretending it did not happen.

These are not the kind of stocks that are going to 10x over the next decade. They are closer to a cigar butt with more puffs left than the market seems to think. You have balance sheets that have been cleaned up, dividends that are covered, contracts that are already signed, and appraised land values that sit above where the equity trades today.

In a frothy environment, that combination is rare.

This write up is my attempt to lay that out. Why farmland still appeals to me. Why these two small REITs look mispriced. And why I think the gap between market price and land value eventually has to close in one direction or the other.

I will start with how the business actually works, because if you do not understand how these vehicles make money, NAV discounts do not mean much. After that I will get into the specific companies, how they differ, and how I would think about owning them.

You can probably guess the tickers if you follow this space. But I will save the nitty-gritty and the actual work for the paid side of this post.