Global Water Crisis and Desalination
by Anonymous Questions | February 25, 2016 7:14 pm
I have heard of the Global Water Crisis before (as I would guess most have), but hadn’t really considered how combating it could be financially actionable. And then watched ”The Big Short” last night, about the economic collapse of 2008’s Housing Market bubble. At the end of the movie, it gave a black-screen text update of where people had gone in life and what they were doing now. In that scene it said that Michael Burry[1] had gone and was privately investing solely in water[2] (I assume, based upon the water crisis the world faces now, and even more so in the future). That lead me to this article by the Fool, and I was hoping that you’d be able to take a look at it and see if you think there’s any merit to what is said.
http://www.fool.com/investing/general/2014/03/01/5-desalination-companies-that-could-end-california.aspx[3]
Thank you very much for your time and attention to this matter. I really enjoy this site you have set up, and think you give very practical, reasonable, logical analysis when it comes to teasers. I greatly respect your opinion.
- Michael Burry: https://www.stockgumshoe.com/tag/michael-burry/
- water: https://www.stockgumshoe.com/tag/water/
- http://www.fool.com/investing/general/2014/03/01/5-desalination-companies-that-could-end-california.aspx: http://www.fool.com/investing/general/2014/03/01/5-desalination-companies-that-could-end-california.aspx
Source URL: https://www.stockgumshoe.com/2016/02/microblog-global-water-crisis-and-desalination/
As a followup to my earlier posed question, what is your thought on American Water Works (AWK) as a long term investment? I’m still painfully new to investing, and readily admit that I don’t specifically know what I’m doing a great majority of the time, but this seems like a smart move on its face. Again, just hoping that you’d have some insight.
Hi questions1, the Gummune has been kicking this around for a while if you or others are interested in joining us here: http://www.stockgumshoe.com/2015/11/microblog-water-our-most-precious-resource/ Best2ALL-Ben
Ah, but we’re teasing out Dr. Bury’s game. It’s not really the same thread.
I’ve been researching the same topic since I read that tagline at the end of the movie. I looked at PHO, and water utilities. Jay Peroni wrote an excellent article outlining and comparing standard water investments. http://jayperoni.com/water-the-ultimate-commodity/
They seemed to me, though, to be the wrong direction. These are all plays on water purification, charging for water in a regulated environment, or transporting water. Some possible water plays that I looked at included desalinization plants and equipment, which is considered to be investment intensive. I was looking for a lower debt environment. Dr. Bury stated in an article that after he methodically researched and thought about water, he realized that water itself was a local market because it’s too heavy to transport easily. He refined his search and said that he settled on agriculture, because food can be transported.He specifically mentioned vegetables.
While that is all true, Dr. Bury is too shrewd to be interested in green peppers if he’s really after water. Since I’ve lived in the West most of my life, the first thought that occurred to me was : water rights. If an agricultural company also has important water rights then that would most likely be the play that Dr. Bury is making.
Here’s something interesting that my personal research turned up: LOS ANGELES – February 12, 2016 (Investorideas.com stocks newswire) Cadiz Inc. (NASDAQ:CDZI) announced today that it has completed arrangements with agricultural partner Fenner Valley Farms, LLC (“FVF LLC”), a subsidiary of Water Asset Management, LLC (“WAM”), to accelerate the development of irrigated acreage on its contiguous properties in eastern San Bernardino County, California.
Here’s some interesting information on Cadiz: Cadiz, Inc. acquires and develops water-related land and agricultural assets. Cadiz has created a portfolio of land-holdings, water resources and agricultural operations. With its subsidiary, Sun World International, Inc., Cadiz is one of the largest vertically integrated agricultural companies. The Company owns significant landholdings with substantial water resources.
Is this Dr. Bury’s play? No, with his resources I suspect he might be deep into WAM instead. But we can ride that sweet ride with Cadiz and similar plays.
Just another note, since this topic title includes desalination; Lockheed Martin (LMT), usually known for Instruments of War, has acquired the patent for a graphene filter for desalination. This makes the desalination process much less expensive, at just the time that California is sincerely considering a large investment in desalination. Gov. Brown is known for making a penny squeak, so LMT is a shoe-in for that contract. LMT stock is up, but I’m thinking it’s undervalued. And with relatively inexpensive water, less arable but fertile land is more valuable.
Still, do I truly believe that Lockheed is changing its business model? Or has control of water become the new strategic weapon?
Lockheed works on a lot of little projects that aren’t part of their core business — this is one of them. The stock was promoted because of this graphene nano-filter for desalination about a year and a half ago by Kent Moors, and it is a cool possibility but it’s still very early days in development. And I suspect it will probably never have a meaningful impact on Lockheed’s income statement, though perhaps it’s not impossible in the distant future — LMT is a massive, massive company.
Nestle corp has been acquiring water rights worldwide for over 20 years. Water may become like hydro and tele, price based on monthly volume used. Desalination in my opinion is to become competitive as oil companiy drilling and fracing and dam resovoirs are making underground water toxic, thus water is to become anouther household utility. Perhaps filters and other water treatment remedies may be a good investment.. We no longer have a right to earths water. Corporations own the rights or cleansing process.