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Michael burry became famous after The Big Short movie came out he's one of just a few investors who successfully shorted the housing market leading up to the great financial crisis and he amassed a small fortune in the process by the time he closed his hedge fund he had earned about 100 50 times higher returns than the S&P 500 and that makes him one of the best investors of our time some people claim that he was just lucky but he's actually had quite a few other very successful calls as an example he shorted The Arc Innovation Fund in 2020 1 he also shorted Tesla around the same time he was also one of the early investors in GameStop and he's had many other successful calls therefore I think it's worthwhile to follow not only what he's doing on the short side but also on the long side and it's interesting to note here that one of his biggest Investments is forland and yet very few people are talking about that following the great financial crisis Michael bur did a lot of interviews and one of them he said that I believe that agricultural land with water on site will be very valuable in the future and I've put a good amount of money into that so I'm investing in alternative Investments then when he was asked by the interviewer how much he was investing in forland he simply answered that I don't want to disclose that but a significant amount this interview is now over a decade old but forland is an IL liquid asset class and typically its owners will hold it for the long run Michael burry confirmed in 2015 that he was still heavily investing in Farmland as the end of The Big Short movie read that the small investing he still does is all focus on one commodity which is water and he had previously clarified that the best way to invest in water is through farmland and so today I'm going to dive into why you may want to also consider farmland for your portfolio and then I'm going to discuss how I am personally investing in Farmland hey everyone this is your sh run a small investment firm that specializes in wreath investing in today's video I'm going to talk to you about why I am quite heavily investing in Farmland I'm going to discuss three reasons why and how you can replicate my strategy before I get started please let me know in the comment section below if you would be interested in me cover bring more of these alternative Investments like farmland or would you prefer that I keep focusing on rits instead and then secondly if you could please click the like button that really helped me a lot to grow this channel thank you so much in advance so I think that there are three main reasons why I think that Michael bur is heavily investing in Farmland the first reason is that it provides stability to your portfolio during times of Crisis Michael bar is what you would typically describe as a Perma bear he tends to see the glass rather half empty than half full he's very worried about black swans inflation geopolitics Wars and other potential risks and with that in mind it makes a lot of sense that he heavily invest in Farmland because it's arguably the safest asset class in the world it's absolutely essential to the survival of the human race it cannot be inflated away we cannot make more Farmland it generates steady cash flow and the demand for food is steadily rising over time as a result of the growing population and the rising middle class this explains why the value of Farmland has been incredibly resilient during past crisises this includes a great financial crisis the pandemic as well as the recent surge in interest rates the most recent example is 2022 when the rate hiking cycle began and this is when most asset classes including stocks bonds uh gold crypto even all collapse in value but forland kept gaining in value it Rose by about 10% in 2022 so if you're worried about the future and you think that we may be facing some other black swans down the line such as I don't know China invading Taiwan or perhaps the war in the Middle East is uh escalating further or even the one in Europe then it may make sense to include some forland in your portfolio simply for the sake of diversification it will help you sleep better at night then the second reason why bur is investing in fman is that he fears that inflation will get out of control down the line Michael burry deletes most of his own tweets and that makes it a bit difficult to follow his latest thoughts but there a few Twitter pages sorry X pages that take screenshots of their tweets to keep an archive of his latest thoughts and if you scroll through one of these Pages I'll put a link in the description of this video you'll see there that he worries a lot about inflation and in that context fan makes a lot of sense in his portfolio he seems to fear that we could be facing hyperinflation sometime in the future and in that scenario Farmland is arguably the best investment you could own because it shows the highest correlation to the CPI we often hear Financial pundits talk about gold when referring to good inflation Hedges but Farmland is arguably an even better inflation catch because it produces the most basic necessity which is is food gold on the other hand is much less of a necessity and most of its value is really just a function of speculation and Market sentiment and then the third reason to consider forland as part of a diversified portfolio is that it offers competitive total returns especially for a relatively safe asset class over many of the past multi-decade time periods Farmland has generated roughly 10% average annual total returns and that's unleveraged so if you added a mortgage on top of it and you leverage your Capital you could have R close to 12 to 15% average Returns on your equity and that's quite a bit more than most other stocks or bonds or even gold would offer historically forland has outperformed even the S&P 500 over many time periods and that's despite being far safer as an investment its volatility has been a lot lower it has offered the diversification benefits also offers a lot of income and so with that in mind its risk adjusted returns have been very competitive and while Farmland isn't cheap today you can still expect pretty strong returns going forward simply because if you're getting a four to 5% and yield simply from renting the land to a farmer All You Need is Another 4 to 5% of annual growth to reach double digital returns and that seems quite reasonable given that historically Farmland has gained even more value and the same drivers that push Farmland value is higher still exist today the population is steadily Rising so increasing the demand for food at the same time the middle class in many of the emerging countries is also Rising this leads to changes in diets the more heavy consumption of proteins which then requires more far Farmland as well and then thirdly we are not making more land on the contrary a lot of Farmland goes into better use developments every year and so the total quantity of Farmland maybe even declining even as the population and the middle class is rising and so because of these demographic factors it's quite likely that Farmland will keep gaining value over the long run we of course cannot predict how farmland or any other asset class will perform in any given specific here but over the long run if you're earning a four 5% yield and on on top of that you add 3 4 5% of growth you should get quite competitive total returns in the future and so to recap it provides valuable diversification in a chaotic world then it provides inflation protection and provides very competitive risk adjusted total returns I think that these are the three reasons why Michael bur is heavily investing in farmland and there're also the reasons why I'm personally investing in farmland and here is how I do it so if you're an individual investor like me your options are quite limited here because unless you're managing tens of millions of capital you're not going to be able to build a well Diversified portfolio by geography weather risk and crop and so because of this not going to be realistic for you to buy Farmland in the private market like Michael bur does or or Bill Gates or even Juan Buffett instead I'm investing in Farmland with two other methods the first one is through Real Estate Investment Trust so RS in short today there are two of them in the US the first one is glassstone commercial and the second one is forland Partners both allow you to invest in forland by simply buying their stock which is publicly traded on the stock stock market the main benefits of these reads is that they allow you to gain Diversified exposure to Farmland with professional management and you remain liquid as well but on the flip side there also a few downsides as well the main one is that if you're looking for stability in your portfolio you're not going to get it here if you look at the past sh price Performance Glass own land or Farmland Partners you'll see that they've been very volatile historically and so while I think that over the long run their returns are going to closely correlate with those of Farland over the short run they really want protect your portfolio from volatility secondly these RS use quite a bit of Leverage and so they are quite heavily impacted by the recent surge interest rates and this increases the risks of these Farmland rates when compared to traditional Farmland Investments and then thirdly in the case of Farmland Partners it's not just a pure forland investment because the company also has a brokerage and a forland asset management business and the risk and return characteristics of these businesses are quite a bit higher than those of a traditional fan investment even then I think that these rats can be quite attract I po patient long-term oriented investors will not panic over the near-term volatility and will be able to maintain a long-term Outlook I myself own a position in Farmland Partners to a symbol fpi I think that it owns high quality assets it balance sheet is reasonable the management is well aligned with shareholders and yet its valuation is today discounted the management is buying back stock and over the long run I expect it to do fairly well for shareholders and then the second way how I gain exposure to forland is through crowdfunding today there are quite a few of these platforms the biggest ones are Farm together acot Trader F funder and there a few others these are essentially asset management companies that specialize in Farmland Investments and they use technology in the form of crowdfunding to raise Capital more efficiently which then allows them to offer more competitive fees for their investors my favorite platform is Farm together because of three key reasons the first reason is simply that I've known their founder for many years and I even had the opportunity to invest as an angel investor in their company the second reason is that they tend to focus on Farmland deals that for high yields and I personally prefer to focus on earning High income rather than speculate on growth and then the third reason is that they take a very active approach to Farmland they are not just buying land and waiting for it to gain value they will often buy Farmland that they know suffer some issues they will work on resolving those issues to create value for the investors here we can take an example of a deal that they are currently offering on their website it came out a few days ago it's already 67% funded I see here so there's not much capacity left in case you're interested in investing in it but it's this is a citrus deal it's offering a near 10% cash yield with a 10% hold and 0% leverage and so this already shows you some of the pros and cons the main Pro is that they able to reach his very high yields by being selective finding off Market transactions creating value themsel but one downside for some of you might be the long-term hold this is a new liquid asset class it's going to be a 10-year hold there's no guarantee that there's going to be a liquidity event before that so if you're going to invest in Farmland through a platform like Farm together you need to have a long-term Outlook over the 10 year hold they're expecting to earn a 2.4 time multiple on your money and what I think is quite attractive here is that they think they can achieve these high returns while using zero leverage they're pros and cons to everything the main Pros here in the case of crowdfunding is that with Farm together you can get really high yields you also get the real benefits of farmland and stability its inflation protection this is a real private Farmland investment that you're going to own you have Professional Management I think that these guys have a great track record they to thems invest in all of their deals as I said I've known the their founder for years I I hold them in very high regard but then on on on the con side this is going to be IL liquid so you need to have a long-term Outlook if you think you're going to need this money in two years then this obviously isn't for you but also investment minimums and so clearly it's not suited for everyone but basically how I achieve my for allocation is by combining Crow funding with rat and I think that the combination of both affords me the best CR reward that I can get today if you want to learn more about this deal that they currently have on their website I'll put a link to it in the description of this video I'm not getting paid to promote this deal but I think it's quite attractive and otherwise please let me know in the comment section below what you think about Farmland as an investment and then finally once more if you could please click the like button that really help me a lot to Pro this channel thank you so much in advance see you at my next one bye-bye
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