YouSaid · the spoken record

Carter Malloy

lines on the record: 39
first: 2021-07-04
most recent: 2021-07-04
sittings or episodes: 1
sources: podcast

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“We are set up as a business. Certainly the amount of velocity we have and growth we have as a company, some amazing venture capital investors in our business, the support that we have, the board of directors and advisors we have on board with us here. It's just a great company and we invite you to come get to know us. Come to our website, spend some time, give us a call anytime, chat, email, however you prefer to communicate. We love speaking to people about this. This is what we do, farmland.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“First, go to anchortrader.com. There's a wealth of information there. For us as a company, we have three core commitments, and that is access, liquidity, and transparency within this industry. That last word is really key. And I think you have learned that. Others will learn that as they work with us and get to know us. Beyond that, what really sets us apart as a company is the intense diligence our team is doing here every day, all day, the expertise within our team, the transparency we provide externally, as I had mentioned, the network that we have. I mean, our farm team alone in the first quarter, to give you an example, made over 1,000, had over 1,000 connected calls with farmers and landowners, qualified calls with individuals here that could be partners or farmers or sellers of farmland. And we only did a handful of deals. Again, that gives you a sense as to how large our network is and how big our efforts are. Our company structure sets us apart as well, the way that”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“You said the word earlier democratization, right? The idea is to open it up for everyone to have access. And so our goals are not just to be accredited U.S. investors only by any means. And also, and you said put pressure on you, I want to be clear. If you call us, we do not have salespeople. We have investor education folks on staff, and they are here to help share information, but we are not a sales organization. That is just not how we operate.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Be opening up to individual countries as we go forward. We do like speaking those international investors. We can accommodate them if they're making large investments and they want to acquire a whole farm as an example. It's something that we do quite a bit of work on. If somebody just says, hey, look, I want to buy my own farm and have you guys manage it, then we can work with folks outside of the country. We love the conversation. We'd be happy to have it. And again, bring it to more international people, especially Denmark's dig. We're coming for you Our last major podcast host actually invested on the platform. And so we hope to have you someday soon as well.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Number of reasons. One is compliance. That's the biggest one, and it's something that we take incredibly seriously. Today, we allow accredited U.S. investors only on the website. And that is someone here in the U.S., basically, that is accredited. Accredited means you make $200 or $300,000 a year, or you have a million dollar net worth excluding your residents, or you have a professional designation like you're an investment advisor, or you have your Series 7 as a professional investor, if you will. The reason for that, and some companies take a different approach. Some companies allow international investors as well into their individual deals. We today do not, for simple reason of compliance, in that you have to be, that's a whole other podcast talking about compliance, but something we are just ultra risk averse on because we don't want to put any investors' capital at unnecessary risk and we view that as an unnecessary risk for a lot of people involved. Now, we will.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Firm no today. I think if we were buying a few billion dollars of land a year, then that may be a consideration. Today, let's fast forward to next year. Let's say in 2022, we buy half of a billion dollars of farmland. So 500 million on maybe $100 billion that's sold that year. We would be 0.5% of the total market of buyers. It's highly unlikely we would affect outcomes or prices or yields throughout the industry with that. Now, again, if we're buying $5 billion of farmland a year, then that may become a different story. Although I would imagine at that type of volume, we would likely be in other countries and other types of farmland rather than the strict guidelines we have today.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“It's mostly closely held. There is now something like 35 billion of private equity, so formal private equity and farmland. That's up 10x or so over the last decade. There's a lot of growth in professional investing. But to contextualize that 30 billion, they were talking about over $3 trillion asset class. So still like 1% is those private equity funds. And then you have large individual holders, like you'd mentioned, Bill Gates and certainly other renowned investors active in the asset class. It still represents a tiny fraction of the asset class. Most of it is owned by farmers and it within farming communities or by individual investors or people that have inherited that farmland. There is real active liquidity in the market and that's growing. So 50 to $100 billion of it trades hands every year. So as a company or as an industry of farmland investing, it does not seem that there is any discernible impact from the buying action.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“That is just not a thing that most people in their right mind would do if they even could and most can't do that either. That was really the reason why we built this business is to provide people another option. So on our platform, it's easy, right? It takes a few minutes to do it all electronically inside of our application to go invest in farmland and you can put in 20,000 dollars rather than $2 million. And then it's passive after that. We take care of the investment, the management, payments. facilitation of leasing, insurance, end to end. We are there to support the investors and farmers both to reduce the load to near zero for those investors. So it's truly passive. So first, sort of naming off the, you called out the difficulties of land investing. And that's exactly why we are here as a business. Beyond that, it is a closely held asset, right? So that's the other reason you don't hear much about it in the financial news. One is it's really hard to get involved. And two is.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“To put a wrapper on that previous conversation, you mentioned the necessity of so much more input to provide an ounce or a pound of meat. I think in America, people are used to eating protein three meals a day and probably have it as a beef jerky in the afternoon in between. That is not the way that most of the world eats their meals. It sounds tasty. Many of them are moving that way, but that requires real capital. And so as you're seeing global GDP growth and a rise of middle class, that protein demand is certainly an interesting part of the demand side story for the case for farmland. So something to certainly pay attention to, and I love some of those stats you were naming earlier. To hop into, is there enough of a market here, you know, and why aren't we talking about farmland much? I think you've hit the nail on the head. It's hard for most people. It's impossible. If you want to buy a piece of farmland, you've got to go out to a county you've probably never heard of, meet with a broker you've certainly never met, plop down a million dollars. Oh, and now you get to manage.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Improve their own yields and their own profit margins. And that way we feel if we partner with the right farmers, then we do that much better.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“The last 30 to 50 years dramatic improvements in yield around seed genetics in particular and breeding and GMO to improve the amount that's produced on a particular acre of land. That's a good thing for that piece of land like you described when you look at the entire asset class, it does that hold it back, right? Because that's effectively capping out your price. Over time, inflation would show you it's not. And beyond that, again, those improvements we've seen in our last 30 to 50 years have slowed in terms of the yield per acre on certain commodities. It's harder and harder, incrementally harder and harder to squeeze out gains is the best way to say that, right? There's only physically so much you can actually grow on a square of land. And so those are material considerations. And as a whole, we like continued improvement in overall yields, and especially as it relates to what we view as the more modern farmer and the types of farmers we partner with, the ones that are adopting these software on-farm technologies to”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Limited. I think as a whole, look, especially with Africa, something like 10% of the world or upwards of 10% is malnourished. So my goodness, yes, we want to see continued improvements to be able to grow crops in places where it's difficult to grow, to improve the livelihood of people around the world. But beyond that, remember, we have more and more people. And oh yeah, they are consuming more. And then we have a growing middle class. Think about China alone and the imports necessary for them to grow their massive herd of hogs is a big deal for agriculture. And so not just growing number of mouths defeat around the world and people to support, but also growing consumption among that population. We discussed earlier supply and demand, right? Finite amount of supply of land that is shrinking. Demand for the goods on that land is growing. There is certainly a third factor that you're speaking to right now, which is yields, which is how much can you squeeze off of an acre of land? And we really saw revolutions in this over.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Important consideration when looking at farmland, certainly. Beyond that, it advances in technology, whether that is through seed genetics or biology, some really cool things happening there, or artificial intelligence and machine learning and computer vision, there are some really cool things happening on farms today to improve technology, to reduce the waste, and improve the profit margin of the farmer. Those are a good thing. We like improved yields. We liked improved profit margins for the farmers. That's positive for our tenants. And so ultimately should be positive for us as well.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Name the big one there, which is global warming, it is really affecting farmland today, it's affecting farming regions and farming zones. For the most part, you can adopt practices to that. But in some places, it is more threatening. I was just talking about water in California. That is also true Arizona, New Mexico, California. When it's warmer outside and there's less snowpack on the mountains, there is less water that comes off those mountains when the snow melts. And the rivers have less water coming downstream to your farm. That is a material threat. And again, that's why water diligence is so incredibly important. Likewise, in dry seasons and drought years, again, water becomes really, really important. So we are actively seeing the impacts of that already today. And it's something to be very aware of. Invest in a farm for 10 years, how much different will this region look in 10 years? And for that next person who's purchasing it for 10 or 20 or 50 years, will they be comfortable if that region is stable? And so that is an”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“There is continuity there. There is continued management of the land, there is legal representation for the LLC. So that's all spelled out in the event that we are no longer here. The investors should have the same experience.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“In the unlikely event that me and our team are not here, and first to clarify as a company, we've just closed our Series A funding, we've raised $18 million as a business. We have most of that still in the bank. We are conservative by nature, if you couldn't tell from the conversation already. We plan to be here for a very, very long time. In the event that we are not here, so each LLC is governed, right? So as you mentioned a moment ago, LLC, so call it AcreTrader 150. It goes out and owns a piece of land and the investors own that LLC. Our management company is a manager of that LLC, and that's our relationship with the LLC. But we don't own it. The investors do. And each of those LLCs are governed by a set of documents that instruct what is to occur with that LLC and the outcomes that are sought. And there is specific language in there of if AcreTrader gets hit by a bus, what happens to make sure those LLCs are”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“The contract's certainly there to protect you, and you specifically sound like you do know a lot about agriculture. You specifically hit nutrient mining is what it's called when a farmer comes in and runs the wrong kinds of crops back to back that are bad for your soil. And there are guards against that in relationships and in contracts to avoid that occurring. So I'm going to clean up a little bit on risk because I still want to make sure to spell out that with permanent crops, there are a little more risks, as we discussed earlier, because you're exposed to the commodity price. So if the commodity price goes down, or if you have a bad year of yields, those things can influence your income in a more meaningful way. The interestingly, you started this conversation with Warren Buffett's philosophy around focusing on the downside and the upside takes care of itself and wanted to bring up while his name was mentioned a moment ago, he has one of my more favorite quotes on farmland, which is, I believe I'm going to botch the quote. Sorry, the buffet quote on farmland was something to the tune of, I would rather own all the farmland in the United States than all the gold in the United States.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Answer to there are certainly risks in the world of row crop, but again, without running leverage, it's not like we're seeing row crop farmland go to zero, right? So I think Nebraska is a good example. They did have the most recent measurable bear market. It got super, super heated some of the prices there in the mid 2012s, like probably 2012, 2014. Like crazy speculations prices went up big. And after that, they had a subsequent five-year period where prices went down the value of the land went down something like 17%. But in the end, the investors remember they were still getting the rent check from the farmer. So the investors nominally made a couple of points over the life of that investment. So when we speak to risk, especially on row crop, it's seldom that you hear somebody getting wiped out, right? Which is a real risk you take in investing in a lot of other assets. So I want to make sure I contextualize the risk here.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Amazing soils in the world, actually, and they have water problems, it's too much water, and the water stays on the farm. That's also can be ruinous to a crop if the things your soybeans are sitting underwater for two weeks, then they don't have any more soybeans. And so making sure you get water off there. I'm getting along with an answer to diligence is incredibly important in buying high quality assets is very important. And if you don't, then the risks increase pretty meaningfully. There is what's called dry cropland, land that is not irrigated. So think Nebraska, North Dakota, South Dakota, especially more of the center parts of those states where you're relying on the weather and rain cycles. And that's fine. There can be some attractive investments there, but it's certainly a new dynamic when the farmers having to do rain dances to hope that you get rain some years because that will affect the farmer's outcomes if you have a drought or if you have a flood that can be a negative for them and ultimately for the landowner and the value of the land. So long enough.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“There's a contract they owe you the money, but that can happen. Beyond that, that's row crops where it's fairly straightforward lease agreements and look for good tenants that pay their bills on time and most really do. If you buy a lower quality farm, that could be a risk that it won't appreciate as well. If you buy a farm prone to flooding and it floods, you know, it's next to a river and it floods often, then the farmers may not want to rent it from you. And so that may hurt your income. If you buy a farm without water, there's a lot of risks. We really want to have water and I'm staying on row crops and I'll go over to permanent crops and the risk there in a moment. With row crop farmland here in Arkansas where I live at Mississippi River Delta, I'm getting water onto your crops really does matter. You need to have wells or pumps or reclamation systems or have access to water to pump it on during those really hot summer days. You also need to be able to get the water off. Going up to Illinois and Iowa, some of the most”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“More seed or inputs, or whatever that may be, to run their business. So we do see very low vacancy and default rates. Those things can happen, though. Those are still a risk, certainly. The farmer in the back, if they pay half the rent up front in March”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“For row crops that we discussed earlier, the rent is typically fixed. In some contracts, lease contracts, there may be a fixed base rent and then some flex upward if the farmer has a good year. Like right now where commodity prices are, the farms we have flex leases will likely see some upside to the lease this year. But those leases tend to be fixed. And they tend to be at least half paid upfront. But that means if the farmer gives you the money before they put a seed in the ground. So if that farmer does not pay you, that tenant does not pay you in honor of the contract, then you have the ability to go out and find another farmer before the season begins. So that's, I mentioned earlier that default rates tend to be fairly low. That's why. Vacancy rates low also. So occupancy very, very high. And the reason it's pretty straightforward, most farmers want economies of scale. They already own the tractor and the equipment. They've got the labor force and the software having more land to farm gives them more buying power to go out and buy.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“There's a hiccup in cash flow for any reason. We don't want to have to refi or have a bank chase us or anything like that. And again, throughout the industry, it's very uncommon that that occurs, but still, we want to be cautious. With permanent crops, where, as we discussed earlier, if you're planting trees, the banks are very oftentimes, they tend to be excited about lending against that because the LTVs are still low and you can go get some debt to plant the trees as an example. And even then, though, the loan to values tend to be 50% or lower, which is lower than you'll see it on just about any publicly marketed real estate deals. So throughout the asset class, there is real conservatism. That is part of the reason why you don't see as much volatility in farmland prices is because the leverage is not there to swing it around. And that's something that we frankly like.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“All your money. That is not a favorable outcome. And sure, that debt amplification can improve returns. And we're not completely debt averse. I'll describe that in a moment. But throughout the farming ecosystem, the loan to values today are something like 13 or 14% LTV throughout U.S. farmland. It's staggeringly low. And so very unlevered asset class. I think that is also good for the health of the asset class because in times of problems and problematic economic times, there's not the necessity to sell because the bank's not calling most of the farmers and farmland owners because they don't have a bank. And so that is a very positive thing for the larger ecosystem. Now, back to Acre Trader and how we approach the asset with row crops, we almost never put any debt on row crops. And part of the reason there is the cash flows aren't that big anyway. And so what we want to be cautious of is if”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“A big part of that is just conservatism. I think that is one of the great appeals of the asset class is that we said this a moment ago, that compounding of capital over time and being conservative with this portion of your investments. And that's a mentality that we maintain here internally. And I think, frankly, is maintained throughout the entire farmland system in the United States. So loan to value or LTV is a term or an acronym used throughout real estate investing, whether that's commercial or residential or farmland. And that is if you have $100 worth of real estate asset and you have $50 of debt, you've got a 50% loan to value. If you have 80% loan or 80 of debt and the $20 of equity or cash you put in, then that LTV is $80. So you got 80% debt. So when people buy a home, they usually buy around that 80% mark. That is very levered. And what that means is if the price of the home goes down 20%, assuming you have to sell, you've lost.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“It's often related more to farmers than investors. They are the extreme majority of buyers and sellers in our industry within farmland. And so often it's a barometer on their healthiness and the way they're feeling. And you see that similar lower return period. There's a big commodities boom in 2010 to 2014, call it. And you see for 2015 to 2020, it slowed down quite a bit as commodity prices were under pressure and there was less activity and less appreciation or growth in the asset. And then we have been seeing it really pick up here again in the last six to 12 months as commodity prices have begun to rally again. So it does tend to move in those longer cycles.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Consistent performing over time. And that's okay. The trade off you're making, and the reason that statement can be true is because this is not a get rid. Some third party validation put out by Nuveen, TIAA, Prudential, so some very large funds that are also active in the sector and have some great research out there that you can find online with a few searches, or we referenced them on our website as well.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“That statement is true. The problem we have with farmland is that there is not a lot of data, despite how big it is, it's a pretty closely held asset. So that's why we use that reference date of 1990. That's when the data collection became far more professionalized with NC Reef, NCREIF, or NACE REF is what a lot of people call it. It's a private equity measuring stick, effectively. So it's used for measuring private equity performance in apartments and commercial real estate and also farmland. And so there have been major contributors to that now for 30 plus years. And that's what we refer to often for the data. The USDA has some data that is similar and goes back further in time. It's survey-based, so the accuracy is not going to be quite as great in most cases, but it would also support that same notion. You are right that since 1990, we have not had any big down years in farmland. The statement is also somewhat true if you look at bonds as an example or fixed income, tends to be pretty”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“I'm not tax advisor, and this is not tax advice. For most people, it tends to work just like stock students. You've hit the nail on the head. Your dividends with an LLC, it's distributions, but same thing, right? The cash coming off tends to be taxed as ordinary income, just as it usually would be coming off of stocks. And then at time of sale, the money you've made off of appreciation tends to be taxed as a capital gain. So very similar to stocks for most people.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“While the land value is going up over time, can go up over time, the trees can go down over time because they have a useful life. And with almonds at maybe 20, 25 years, with olives, that may be 75 years. But nonetheless, the trees, their value does go down over time. So you have a little less appreciation, more cash flow. Again, that's describing permanent crops like fruits and nuts. With row crops, you tend to have more appreciation and a little less cash flow. Both have ended up over long periods of time. Again, producing that 10, 11, 12% type of compounded annual return or average annual return to the investor over long periods of time and done so these assets have done so with a lot less volatility than comparable assets like the S&P 500 or commercial real estate where the returns over long periods of time are similar or a little lower than farmland but farmland does not tend to whip around in value like those things do that's why we're so excited about farmland risk adjusted return”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“That tree, you've planted a tree, you've waited for it to grow. And if the price of almonds between now and three, four, five years from now, if it goes up dramatically, great. If it goes down, that's also a risk you take as an investor. So you do have some commodity exposure when you own permanent crops. Now to the investor, what this means is fluctuations in value or the fluctuations in income for permanent crops tend to be a little wider. So those almond trees are going to give you more variability in income. But over a long period of time, they tend to show a higher absolute cash flow to the investor. So for every hundred dollars you've invested, you tend to make more annually in cash off of those trees than you do off of the row crop where you're growing rice as an example. So that's the basic premise is for row crops, primarily looking for quality land that appreciates, and then you get a little bit of cash on top. Or permanent crops, you are getting more cash and a little less appreciation.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Most often trees, so almonds, walnuts, pistachios, pecans, apples, pears, oranges, things that grow on trees. As the investor, you usually own that land underneath it, but you also own the trees. So if you own almond trees as an example, you are now exposed to the commodity itself, right? Because you own the trees, you own the land, and so you are paid more based on the productivity of that land. So that being the number of almonds or the pounds of almonds that come off of that tree. And then the price that is being paid for those almonds in market. So I'm sticking with this almond example for a moment. It helps illustrate a little bit of nuances and complexities with permanent crops, but they are also very interesting as an investment vehicle. You own the land, you own the trees. The trees take a couple of years, maybe five to get the full productivity. They're baby trees, right? They have to grow up before they begin to shed fruit. And at that point then, you're paid on the yield of those trees times the commodity price, but you are married.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Very straightforward agreement default rates and vacancy rates are extremely, extremely low, just exceptionally low across the industry. And so it's a very simple, straightforward relationship between the farmer and the landowner. So again, farmers paying rents. So you have a cash component of the investment. And then the land itself appreciates over time. We've seen that over long periods of time, call it around 6% a year over the last 30, 50 years is what land has appreciated annually. The underlying value that can compound underneath you, that being the land, the asset, and then the rent coming off the farm. What I've just described is row crops. That's the majority of farmland in the US. Most investment portfolios tend to be majority row crop farmland. But then there is permanent cropland at risk of becoming a little too complicated. I do want to bring this up as well because it's a different type of investment. Permanent crops are things that grow on vines, sometimes bushes.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely so. And I think it's probably a pretty important question. How does this work? How do I actually make money here? With farmland as a general statement, investors have made money two ways. Number one is the asset itself appreciating. So the land growing in value over time. Number two is the farmer pays rent. So in the most simple version for row crops, and I'll delineate between row crops and permanent crops here in a moment, but in the more simple version of row crops, it's things that you plant every year. So rice, cotton, soybeans, corn, very simply, the landowner or the investor, this is about 40% of US land is absentee owned, meaning that it's not the farmer that owns it. The landowner charges the farmer a simple rent, similar to if you own an apartment building or a commercial building and you had a tenant, you own the building, they pay rent. That is the same thing here. Albeit, it is a little more simplified in that the farmer usually pays rent once or twice a year.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“A really good question. We do see places where there's rainforest destruction as an example to create farmland. That's a rather unfortunate tragedy. But throughout the world, the farmland tillable acres per capita is the way to look at that. And same thing there. You're seeing pressure on a global scale as well. So the US statistic, there's just more data on US farmland is the reason I call that out, but that is a global phenomenon as well.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Also, some fuel and some fiber. And the demands for those things continue to increase around the world. So the supply and demand setup is pretty straightforward to understand as to why the asset class can be attractive over long periods of time. And then again, on top of that, inflation is also really interesting reason to look at the asset class.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Platform and demand growing on our platform as well from all types of investors, and some of those are certainly folks that are worried about inflation. I think we're seeing it more and more in the news. You may have seen yesterday, Deutsche Bank came out with a big call and a really large concerning headline around their concerns on inflation, whether or not those hold true over time. We will see. But again, we're excited about the asset class either way. And we're discussing some of the mechanics that drive the asset, but I want to quickly mention supply and demand. It is very important to understand that as well, that we only have so much farmland and it's shrinking. So in the US, as an example, farmland trust here, or nonprofit here in the US shows that we lose about three acres per minute of farmland. It's a staggering amount is disappearing due to a development a number of other reasons. So supply shrinking on the other side, demand growing. We have more people to feed. And on farms, we grow food.”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“Gold. Difference with farmland and gold is that farmland produces income as well. Gold does not produce income. You're holding a commodity and hoping somebody else is willing to pay more than you did for it. With farmland is an actual productive asset that produces rents for the investor. Importantly, while it can serve as a great inflation hedge, and again, the historical data will show you that, it is a really fascinating standalone investment, right? So the underlying reasons to invest in farmland, the list is long or a myriad of reasons to invest, including it. It's not really diversified to other asset classes. It has put up some really great historical risk adjusted returns. So low double digit type of returns with low volatility as well. So you don't see it whip around like a lot of other asset classes, including stocks. So there are a lot of really great standalone reasons to invest in farmland. And oh, hey, by the way, it can also serve as an inflation hedge. So yeah, we are seeing lots of interest on our”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT
“To establish it is a large asset class. There's $3 trillion of this stuff in the United States. So it is a very big asset class. And you're exactly right. I think most people are stock investors first and foremost. Personally, that's my background. I spent a dozen years in inequities, most recently in a long short fund. And I love investing in equities. But in the background, I've been buying and selling farmland. My dad's a farmer mom entrepreneur. always was just intrigued by farmland, the financial performance despite the really difficult transaction experiences that are out there. But one of the reasons that it has always been attractive, I believe will remain so, is that it can serve as a hedge against inflation. And the reason is fairly simple. It produces a core component of inflation. Food comes off a farmland. That's one of the ways that we measure inflation. So over time, the data will show you that farmland has actually served as a similar, if not better hedge to inflation than”
2021-07-04 · We Study Billionaires · TIP358: Inflation Hedging with Farmland w/ Carter Malloy · IDENTIFIED FROM THE TRANSCRIPT