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Trading Cash Dividends for Trout Dividends

What is the #1 rule to successful investing?  Buy low, sell high.

And according to The Land Report, that’s just what Jay Ellis has been doing (the article begins on page 17).  Having originally been with Morgan Stanley’s trading desks, Mr. Ellis saw the 2008 financial crisis, and more specifically the plunge in land values, as a prime buying opportunity.  But unlike many land investors, he was not intending to simply make a couple minor improvements and then put it back on the market for a quick sale.  Rather, he was looking to create pristine sporting ranches for high-end buyers.

“Everybody wants a trophy ranch,” Ellis said.  “What nobody is doing is creating trophy ranches for the market.”  With $30 million in backing (and more on the way) from investors like T. Boone Pickens, Ellis created Sporting Ranch Capital and has been working hard to acquire ranches with untapped potential.  He and his teams of experts then set to work improving stream habitats, planting feed plots, and luring big game and water fowl back to the properties.

For Ellis, the most important feature of a ranch is the water.  The more of it, the more valuable the property.  But he also ensures that the ranches are within 40 minutes of airfields, small towns, and ski resorts.  Most have been exhausted by agriculture but have the potential to be restored, especially the fishing habitats.  Indeed, one of the fund’s consultants was tasked with identifying C- and D- rated ranches but which had to have the potential for A+-rated fisheries.

Of course, Ellis and his team don’t do everything for the future landowners.  For example, while they create spectacular entrances and lay miles of buck-and-rail fencing, they refrain from building any homes.  This, Ellis contends, allows buyers to see the properties as “blank canvases” on which they can create their own feel.

With five ranches in its portfolio, Sporting Ranch Capital recently closed out its initial $30 million fund.  But, with $50 million planned for Fund II, Ellis and his team are already setting their sites on the next round of acquisitions.

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