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Last Guru Standing in Hawaii--Chuck Royce and the High-Cost of Paradise
Posted by: Sally Jones (IP Logged)
Date: April 22, 2013 05:11PM

It seems like paradise would come with potable water, irrigated golf courses, and robust sewer lines, but it doesn’t. It’s expensive to develop a luxury resort in paradise, as demonstrated by Maui Land & Pineapple Co. (MLP), a Hawaiian real estate and resort company with 23,400 acres of virtual heaven. The company owns and operates the Kapalua Resort on Hawaii’s northwest shore, as well as public utilities for its water supply, and other business segments.

GuruFocus performed a financial and performance check up on Maui Land & Pineapple Co. (MLP) and found six warning signs. But even with a number of warning signs, MLP is on the keeps-buying list of Guru Chuck Royce, President and Co-Chief Investment Officer of Royce & Associates. As of March 31, 2013, Guru Chuck Royce increased his position with MLP and bought 5,000 more shares at an average price of $4.04, averaging a loss of 19% on his holding since he first bought at $5.85 in first quarter 2011. Royce currently holds 285,971 shares, or 1.52% of shares outstanding.

His holding history:

Maui Land & Pineapple Co. (MLP) has a market cap of $76.56 million and is down 3% year to date. For a resort-centered company, their accounts receivables are way down, hard hit by resort competition in Hawaii as well as decreasing tourists and increasing costs of island living.

Compare the company’s accounts receivables and payables:

MLP data by[url=''][/url]

Maui Land & Pineapple Co. (MLP) also owns and manages residential, commercial, and industrial real estate through its other business segments, last reporting for third quarter 2012 with a net loss of $1.6 million, or $(0.09) per share, for the third quarter of 2012, compared to a net loss of $1.3 million, or $(0.07) per share for the third quarter of 2011. The company reported revenues of $3.6 million and $3.4 million during the third quarters of 2012 and 2011, respectively. For the nine months ended September 30, 2012, the company reported a net loss of $2.9 million, or $(0.16) per share, compared to net income of $8.6 million, or $0.47 per share, for the nine months ended September 30, 2011.

Furthermore, the company has been selling off assets to manage; the sale of a golf course for a $15.1 million gain is included in the company’s net income for the nine months ended September 30, 2011. Year 2012 revenues included the sale of an 89-acre parcel for $1.5 million.

Since this incredible real estate is bound to be developed as part of Earth’s last luxury get away, why aren’t more Gurus buying? Maybe they haven’t yet visited Maui. If they had felt the inimitable spirit of aloha or had swum with wild dolphins, wouldn’t they flee their hedge fund offices to buy up this almost-utopia and live there?

Visionary Guru Chuck Royce is the only one looking way far ahead and he sees the long-term value as do recent MLP inside traders.

GuruFocus "Real Time Picks" reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only. If you are not a Premium Member, we invite you for a 7-day Free Trial.

Also, check out the GuruFocus special feature 52-week low screener. This special feature helps you find the stocks hitting new lows but are still held by top investor Gurus and Insiders.

If billionaire Gurus own these stocks and are still increasing their positions, it means that they believe the stocks are undervalued. Researching these stocks may help you find deep valued stocks.

Guru Discussed: Chuck Royce: Current Portfolio, Stock Picks
Stocks Discussed: MLP,
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