Investors Go Nuts For Almonds

First it was the dot-com boom. Then the real estate market heated up. That was followed by hedge fund mania. But, it's only now that investors are really going nuts. Going nuts about nuts. Almonds to be specific.

According to today's Wall Street Journal:

Greg Hostetler is a real-estate developer who builds subdivisions in California's Central Valley. But the past few years, he's gone nuts.

To be precise, Mr. Hostetler has been building a sideline in almonds, spending $60 million to buy and plant 4,500 acres of trees since 2000. This year, he plans to shell out at least another $5 million to plant an additional 1,000 acres.

"The almond market is looking a lot better than the housing market right now," he says.

Mr. Hostetler isn't the only newcomer jumping into California's almond game, where orchards now stretch down the Central Valley from Red Bluff in the north to Bakersfield in the south. In the past few years, doctors, lawyers, pension-fund managers and pro football Hall-of-Famers, among others, have all snapped up farmland in the state to plant almonds as world-wide demand for the nut has grown by 11% between 2001 and 2006. And despite some concerns on the horizon, many of the newer growers remain optimistic.

"Everyone knows that almonds are a great investment," says Monterey, Calif., restaurateur Dominic Mercurio, who has teamed with football commentator John Madden to purchase nearly 400 acres of almond orchards, spending more than $3 million since they bought their first 25 acres in the late 1990s. Mr. Mercurio says he and the former Oakland Raiders coach intend to buy at least another 600 acres in the next few years.

Sounds like what we really have here is a lot of people banking on the future popularity of Almond Joy candy bars. Still, just as with all investment prospects, there is no guarantee. Sometimes you feel like a nut - sometimes you don't.