Interview with Chris Rawley

Not a farmer

Did not grow up in the ag world

Military - Navy

Went to work in real estate

First alt investing was real estate

Worked in different industries

Few years ago became enamored in ag as asset class

Ag is an asset class that is taken for granted

Crowdfunding act of 2012 for investors

• Pooling small $ together to buy larger assets
• Allowed retail crowdfunding for non-accredited investors

A number of real estate funds focusing on apt buildings, etc

Created “harvest returns” about a year ago

Put money in private placements of ag

Have investors w existing land and make the opportunity available for investors

Focused on the production side (crops, land, etc)

HR focused on accredited investors

Non-accredited by end of the year

Reasons to invest in ag

• World population
• • Urbanization - arable land is shrinking
  • Wealthy populations shift from plant protein to animal protein, more ag devoted to protein
• Returns
• • Farmland has outpaced S&P, reits, gold, since 1970
  • The underlying land
  • Price of crops has increased
  • Operations of the land
• Tangible
• • Like real estate
  • Real land
  • Returns positively correlated to inflation

Common investment for large institutions

Very challenging to access these investments

There are some farmland and timberland REITs

• Problem: correlated with greater stock market

There are some funds but have really high minimums ($250K)

Liquidity is a double-edged sword

Allowing on the marketplace:

• Confidence in management team
• Location, trends
• Expected returns

Regulatory environment

• Act of 2012
• SEC published rules for
• Big learning curve regarding regulation

How will you validate yourself to a skeptical market?

• Why is ag a good investment?
• Why crowdsourcing a safe/good idea?
• Learning curve on the farmer side

Looking for people raising $500K-$2M

Sale/leaseback deals

Provide creative financing opportunities

How much of portfolio? ~5-15%

https://www.harvestreturns.com/

http://investorinthefamily.com/

Welcome to Episode 5 of the "Becoming Buffett" Series!

This week we discuss the 1969 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

Some brief notes:

1969

• Proceeds from funds temporarily utilized in marketable securities were able to fund major purchase of 1969 (The Illinois National Bank and Trust Co.).
• • Used money from stock investments to make an acquisition
  • Perhaps someday we could take money out of an IRA or other account and acquire a company?
• Allocating capital into securities like this allowed BH to see annual returns of more than 10% as compared to the return in textile operations of only 5%
• • Buffett saw that BH’s core business was struggling and diversified into stronger sectors (insurance, stocks, etc)
  • Do you have a metric or means for measuring the total return on capital for your household, factoring in all data points (ex: your salary, raise, investments, etc.)?
• “We anticipate no further purchases of marketable securities, but our search for desirable acquisitions continues.”
• • Any such acquisition would be dependent upon obtaining proper financing.
  • BH was open to borrowing in order to take advantage of the right opportunity, how do you feel about that for yourself?
• Textile business is struggling, slowdown greater than expected and recovery for the sector appears dependent upon Federal Gov intervention
• Insurance company continues to perform wonderfully
• • New California operation will take a few years before an intelligent verdict can be made about operating results
  • Yet another reminder to be patient with investments when the buy thesis is still intact
  • When was last time you were patient (meaning years) in waiting for an investment to finally materialize?
  • What is your patience threshold? Years? Months? Weeks?
• Acquired a bank
• • Bank is operating at peak profits and performance
  • BH bought a bank performing at the top of it’s game, did not go into details as to the price of acquisition. Was okay buying at it’s peak because of value it could bring to BH overall and in future.
  • Don’t have to limit ourselves to companies that are struggling (often mindset in value investing)

http://investorinthefamily.com/