Indoor Farming Firm, with help from Ubben, is making an attempt to unravel America’s product issues
Company: AppHarvest Inc. (APPH)
The agro technology company is focused on building an indoor farm in Appalachia. Combining agricultural techniques with cutting edge technology, the company provides access to nutritious food, farming and building a local food supply for all. The company operates a 60-acre controlled-environment farm in Morehead, Kentucky, which grows juicy steak tomatoes and tomatoes on the vine. It also operates a 60 acre indoor farm outside of Richmond, Kentucky that grows fresh fruits and vegetables. The company’s technological systems monitor pollination in all 68 pens and 684 rows of plants. AppHarvest is only the fourth US approved B company. AB Corporation is a company that has (1) achieved a high standard of social and environmental performance as measured by the B-Impact Assessment, (2) verified its ratings against transparency requirements, and (3) has a legal obligation to consider all stakeholders . not just shareholders. Any company can apply as one.
Market value: $ 3.3 billion ($ 33.26 per share)
Activist: Inclusive Capital
Percentage ownership: 12.05%
Average cost: n / A
Activist Comment: Inclusive Capital Partners was founded in 2020 by ValueAct founder Jeff Ubben to promote capitalism and governance for a healthy planet and the health of its people. The company strives for long-term shareholder value through an active partnership with companies whose core business contributes solutions to this pursuit. Inclusive is a return-oriented fund with a focus on environmental and social investments. Her main focus is on the ecological and social added value that leads to the added value of the shareholders. It is the successor to the ValueAct Spring Fund, which was launched in January 2018 and merged into Inclusive in 2020. Inclusive is building a huge network and counting on experts from industries such as energy, electrification, water, agriculture, food production, particles, education and human rights. Just like ValueAct’s constructive, patient investment style, Inclusive will seek to win the trust of managers, board members and institutional investors. Jeff Ubben is the portfolio manager and Eva Zlotnicka is the vice president. Eva has a pre-existing relationship with ValueAct through her interactions with Morgan Stanley, where she served as VP and US lead for the Global Sustainability Research Team. At Morgan Stanley, she worked to address and raise awareness about environmental and social issues inside and outside companies.
Jeff Ubben has been appointed to the company’s board of directors in connection with the business combination with Novus Capital.
This was originally an investment by the ValueAct Spring Fund, which was converted into Inclusive Capital in 2020. Jeff Ubben first met AppHarvest founder Jonathan Webb in 2017 and has been with the company since the 2018 Series A round to manage the team together and develop a strong record. The company went public on February 1, 2021 through a SPAC transaction of $ 100 million and a PIPE investment of $ 375 million. Jeff Ubben is on the board where he can continue to help the company run it.
AppHarvest plans to have 12 facilities by 2025. The aim is to make Kentucky the Netherlands of North America. The Netherlands (at 16,000 square miles) is the second largest agricultural exporter in the world, supplying two thirds of Europe with greenhouse technology. By comparison, the state of Kentucky is 40,000 square miles and the United States is 3.8 million square miles. AppHarvest’s motivation is first and foremost to benefit society, but if it is successful, it would also have exceptional financial returns.
As of 2018, 69% of fresh grapevine plants were imported into the US, mostly from Mexico. These crops are loaded with pesticides and grown according to labor practices that do not meet US standards. In addition, they sit on the border for days and are driven over 2,000 miles to their destination on tons of diesel fuel, resulting in less fresh produce. AppHarvest produces higher nutrient density crops without pesticides and from its central location can reach 70% of the US population in one day, resulting in 80% less diesel fuel and much lower emissions. However, the greater environmental and economic benefit lies in the way the crops are grown – with 90% less water and thirty times more yield per acre. Additionally, AppHarvest’s resources are nature-based – the greenhouse structure allows them to enjoy 12 hours of sunlight a day, and they collect the heavy Kentucky rainfall for their system, resulting in far less disruption to the water supply while reducing their production costs significantly don’t have to pay for water. The greenhouse system also eliminates weather and seasonal restrictions, allowing the company to grow more efficiently 365 days a year.
While the company didn’t have historical revenue, it wasn’t until January 19, 2021 that they made their first shipment of beefsteak tomatoes to customers like Walmart, Kroger, and Publix.
Ken Squire is the founder and president of 13D Monitor, an institutional shareholder activism research service, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of 13D activist assets. AppHarvest is an investment in the fund.