Newhall Holding Company LLC [/size] [size=13px; line-height: 1.22](NWDHU) Update: As we noted in our October 31, 2012 report to Fund shareholders, based on the limited trading of Newhall Common, the implied equity market capitalization of Newhall Holding Company LLC was approximately $412 million. We highlighted a "back of the envelope" calculation indicating that the net asset value based on current market conditions should easily be in excess of $1 billion. We also illustrated how house price inflation can translate into much more dramatic lot price appreciation. In our report, we illustrated how a 20% increase in house prices could result in more than a 100% increase in lot prices. According to Case Shiller, Los Angeles has seen the largest drop in for-sale home inventory and has the most positive home price outlook (14%in 2013) of major U.S. cities.The prospects for a continued U.S. housing recovery have resulted in high demand from home builders for buildable lots in major markets and corresponding demand from investors in public and private companies that control land for residential development. Despite its quasi-private status, investor demand for Newhall Common has recently surged, trading has been more active and recent trading prices now reflect an equity market capitalization of over $800 million—nearly double the price six months earlier. The Fund sold 1 million units of Newhall Common during the quarter(approximately 3% of its position) after it received an unsolicited bid from a buyer actively seeking to establish a position.At quarter-end, Newhall Common was the Fund's third largest holding (4.1% of net assets) andwe have no intention of further reducing the position at current prices. While the company still has some land entitlement issues to resolve, we are very confident that Newhall Ranch will be one of the few major providers of residential lots in Los Angeles for the next 15 to 20 years.
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