Is Cadiz Inc. a good bet when you're gambling with the lives of desert wildlife?
Stock for Cadiz Inc., the corporation behind the Cadiz Water Project, has dropped from $13.35 per share of common stock on the Nasdaq one year ago (April 23, 2018) to $9.83 a share on April 18, 2019.
"Cadiz Inc. (NASDAQ:CDZI) has declined 29.68% since April 17, 2018 and is downtrending" wrote Pete Kolinski on MMAHotStuff.com. It has underperformed by 34.05% the S&P500."
If California Senate Bill SB 307 passes this legislative session, it becomes unclear how, or if, Cadiz, Inc. would ever become profitable in the manner the company could become if it was free to mine the vast aquifer under the eastern Mojave. The bill has passed the Natural Resources Committee and is due to be heard by the Appropriations Committee by mid-May. A previous, nearly identical piece of legislation had passed the Assembly and was likely to pass the Senate, but not for Senate President Pro Tem Toni Atkins' purposeful preventing of the bill from coming to the Senate floor for a vote. Atkins campaign has taken Cadiz funds, and former staff members have been reportedly hired by the company.
The Motley Fool's Cadiz (CDZI) Report Card has the company failing in 11 out of 16 categories of evaluation, while receiving a neutral rating in one other category, and passing in four.
Cadiz failed on the Profit Margin evaluation with a "profit" margin noted by Motley Fool, of -5,971.14%. It also failed the Relative Strength, sales and relative growth comparisons, Insider Holdings, Cash Flow From Operations, Profit Margin Consistency (2019: -5,971.14%; 2018: -7,695.45%; 2017: -6,424.39%), Cash and Cash Equivalents, and "The Fool Ratio, the P/E (Price to Earnings) ratio to growth, among other categories.
While Cadiz Inc. has its supporters on Wall Street as well, one has to wonder what would happen to the company's valuation should it not be able to sell the groundwater which is its most valuable commodity, should SB 307 pass, and the science doesn't support the company's plans, or results in a long, unprofitable process with even longer court battles.
It also has a strong advocate in newly appointed (and also newly under investigation) Secretary of the Interior David Bernhardt. As Kim Stringfellow noted in an excellent 2018 piece on KCET, "The Trouble with Cadiz," Bernhard has lobbied in the past for the Westlands Water District in the Central Valley, and is Cadiz CEO Scott Slater's former partner at the law firm of Brownstein Hyatt Farber Schreck, whose motto Stringfellow pointed out, is "Where business, law and politics converge." The firm has made millions of dollars and received stock from Cadiz Inc., according to the L.A. Times.
Whether the stock of Cadiz Inc. goes boom or bust is up to a myriad of complex political, legal, and financial factors. What's clear is that the desert wildlife that will die if the groundwater goes into overdraft and water levels drop, have absolutely no say in their own survival, when it comes to what happens to their water. Cadiz reassures that they will monitor water levels, but by the time a noticeable trend downward may be determined, it can be too late to prevent the drying of springs wildlife depend upon, leaving that wildlife with no viable sources of water; and on a longer term, compaction may occur that could permanently destroy the aquifer.
We strongly recommend your support for the passage of SB 307 which provides safeguards for the groundwater of the Mojave Desert, and the well being of the wildlife that depends upon that water for survival. We know that desert wildlife don't have a cent invested in the Nasdaq, but they do have a lot riding on the outcome of what we choose to do with their water.