Maui Land & Pineapple: Hawaii Land Owner with Development Catalyst

Michael Melby of Gate City Capital Management presented his in-depth investment thesis on Maui Land & Pineapple (US: MLP) at Best Ideas 2019.

Thesis summary:

Maui Land & Pineapple owns 23,000+ acres of land on the island of Maui in Hawaii. The owned acreage includes nearly 21,000 acres of land in and around the world-renowned Kapalua Resort, home to the Ritz-Carlton Kapalua. Most of the company’s land holdings were purchased in the early 1900s and continue to be held on the books at cost. Maui Land & Pineapple owns several fully-entitled parcels of land within the Kapalua Resort.

The company is likely to proceed with development of some of its premier land holdings within the next year. In addition to the land holdings, MLP also owns several buildings within the Kapalua Resort and operates a profitable leasing business. It also operates a water utility company and manages a spa within the Kapalua Resort. These segments generate FCF and provide financial flexibility as the company prepares to develop its land holdings.

MLP has a market cap of $190 million and no net debt as it utilized proceeds from the sale of non-core properties to repay $50+ million of debt over the past three years. MLP stock enables the buyer to purchase Hawaii land at a valuation of just over $8,250 per acre. Mike’s estimates intrinsic value at roughly $400 million or almost $21 per share, representing 100+% upside.

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About the instructor:

Michael Melby is the founder and portfolio manager of Gate City Capital Management, a micro-cap value focused investment firm. Before starting Gate City Capital, Michael worked as a research analyst at Crystal Rock Capital Management where he covered the consumer, restaurant, retail, and gaming sectors. Michael previously worked at Deutsche Bank Securities in their Debt Capital Markets group and at the University of Notre Dame Investment Office where he focused on natural resources, fixed income, and risk management. Michael earned an MBA from the University of Chicago Booth School of Business where he graduated with Honors and a BBA in Finance from the University of Notre Dame where he graduated Summa Cum Laude. Michael is a CFA Charterholder and has earned the Financial Risk Manager designation.