How to Buy Hawaii’s Most Desirable Real Estate for $11

Every single day as I suffer through this frigid winter, I dream of buying a house somewhere beautiful, sunny and warm.

My dreams aren’t just for any random warm location, though. I have a specific place in mind.

For me, there is no place that I would rather be than Maui, Hawaii!

ALTTAG

For now at least, elementary school age children and strong family ties to where I currently live are keeping me from fulfilling that dream.

I can, however, do the next best thing…

I can own a significant piece of Maui and make some serious coin doing it. And you can too!

Introducing Maui Land and Pineapple – A Stock Picker’s Paradise

Maui Land and Pineapple Company, Inc. (MLP) owns more than 23,000 acres in one of the most beautiful parts of Maui. This includes more than 21,000 acres of land right next to the world famous Kapalua Resort.

Maui map

Click to enlarge

The Kapalua Resort is a luxury resort that has two world-class golf courses, white sand beaches, two marine sanctuaries, the Ritz Carlton Hotel, and many other award-winning accommodations.

The point that I want to make very clear is that this isn’t just 23,000 acres of land. This is 23,000 acres of the most desirable, irreplaceable and most valuable land on the entire planet.

Maui Land and Pineapple began operations back in 1903.

By 1933, the company had acquired almost all of the property that it holds today.

The specifics of when Maui Land and Pineapple acquired this land is very important to know.

Because as you can imagine, this land that was acquired prior to 1933 was purchased for pennies on the dollar relative to what it could be sold for today.

Meanwhile, the way that generally accepted accounting standards (GAAP) works is that land is carried on a company’s financial statements at its original cost. For Maui Land and Pineapple, that means that the company’s financial statements are carrying its Maui land at pre-1933 prices!

That would be what you call serious hidden asset value, folks!

What Is This Company Really Worth?

The stock market is currently assigning a value to all of Maui Land and Pineapple of $215 million. That value is calculated by multiplying the company’s share price by the number of shares it has outstanding.

I think that valuation is far too low.

In instances where Hawaiian property has an ocean view, you can see land transactions take place at prices in excess of $500,000/acre. Even agricultural land in Maui gets sold for more than $25,000/acre.

If I am very conservative and assume that a fair valuation for Maui Land and Pineapple’s land would be $20,000 per acre, that would mean the company’s 23,000 acres alone is worth $460 million.

That would peg the value of the land alone as being worth $24 per share, which is more than twice the current trading price of $11 per share!

In addition to the land, Maui Land and Pineapple also operates two public water utilities businesses, a commercial property leasing business, and is working on adding value to the property that it owns by slowly developing it. All of these easily add several additional dollars of value per share.

This is the beauty of stock market investing. Sometimes “Mr. Market” just isn’t very efficient.

A person can’t go to Maui and buy a parcel of land for 50 percent less than what acreage on the island has been selling for. But in the stock market that is exactly what shares of Maui Land and Pineapple are offering us today.

Now if I can just figure out a way to get that nice Mr. Market to sell me some South Pacific heat and send it my way to get me through this winter!

Here’s to looking through the windshield,

Jody Chudley

Jody Chudley
Financial Analyst, The Daily Edge
EdgeFeedback@AgoraFinancial.com

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