We came across a bullish thesis on Maui Land & Pineapple Company, Inc. (MLP) on Substack by The Value Road. In this article, we will summarize the bulls’ thesis on MLP. Maui Land & Pineapple Company, Inc. (MLP)’s share was trading at $23.73 as of Nov 26th. MLP’s trailing P/E was 32.50 according to Yahoo Finance.
A wide-angle view of a mixed-use development project revealing a mix of commercial and residential buildings.
Maui Land & Pineapple Company, Inc. (NYSE:MLP) exemplifies the hidden value that arises from GAAP accounting practices that fail to reflect the true worth of a company’s assets. At first glance, MLP’s balance sheet appears underwhelming, with $41.9 million in assets and $7.7 million in liabilities, resulting in a net asset value of $34.2 million, or just $1.74 per share—far below its current share price of $24.30. This surface-level analysis might lead investors to dismiss the company. However, a deeper dive into its asset portfolio reveals a vastly different picture.
MLP owns 22,300 acres of land in Maui, Hawaii, recorded at a historical cost of $5.05 million, or approximately $226 per acre, as mandated by GAAP. This valuation is a relic of land purchases made between 1911 and 1932, an era of drastically lower land prices. Today, the average price of land in West Maui, where much of MLP’s property is located, exceeds $1.5 million per acre, with some parcels reaching $1.73 million per acre. This suggests the true value of MLP’s holdings could approach $2 billion, a staggering contrast to its book value. Even more modest valuations, such as $12,000 per acre based on the U.S. average, imply a hidden asset value exceeding $267 million, underscoring the profound understatement of MLP’s balance sheet.
The discrepancy in MLP’s land valuation isn’t merely theoretical—it represents a tangible catalyst for revaluation. The company is actively unlocking value through asset sales and development projects, such as ranch lots in Upcountry Maui and a planned community on 1,463 acres in Hali‘imaile, zoned for agriculture and business use. Located within a federal Opportunity Zone, these initiatives are set to transform underutilized land into high-value assets, potentially attracting significant investor attention.
Hidden asset value often garners market recognition gradually, as companies monetize these assets or investors uncover the potential. For MLP, its landholdings’ dramatic appreciation represents a clear opportunity for price re-rating. Patience and strategic analysis are critical for investors aiming to capitalize on such opportunities, as the market’s awakening to hidden value can trigger a rapid stock price ascent. MLP stands as a prime example of how meticulous evaluation of overlooked assets, combined with an understanding of accounting limitations, can uncover substantial investment opportunities hidden in plain sight.
Maui Land & Pineapple Company, Inc. (MLP) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 6 hedge fund portfolios held MLP at the end of the third quarter which was 6 in the previous quarter. While we acknowledge the risk and potential of MLP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MLP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.