Federal Agricultural Mortgage Corp. (AGM) a Strong Business Trading at Discount to Market

June 27, 2014

Portfolio Manager Thomas Eidelman of Eidelman Virant Capital says Federal Agricultural Mortgage Corp. (AGM) is in a dominant position with its niche business, yet is trading at a discount to the market.

“Our latest buy was a company called Agricultural Mortgage, otherwise known as Farmer Mac. Farmer Mac provides a secondary market for qualified agricultural mortgage loans for rural housing, utilities and development loans guaranteed by the U.S. Department of Agriculture,” Eidelman said.


Eidelman says Farmer Mac is similar to Fannie Mae and Freddie Mac in that it is a government-sponsored entity, except it provides a lower-cost financing to farmers. Eidelman believes the company is trading at a discount because of comparisons to Fannie and Freddie.

“It trades just above book value and eight times earnings, whereas a company with a dominant position like theirs should trade at a significant premium to those multiples that I just listed. I think at $4 a share in EPS and $28 in book value, it should be $45 stock instead of a $30 stock,” Eidelman said.