Friday File Preview — “Penny Real Estate”

By Travis Johnson, Stock Gumshoe, July 23, 2014

Dan Ferris has a new teaser pitch out for his Extreme Value newsletter about a “Penny Real Estate” pick that he say is worth multiples of the current stock price. I’m going to cover it on Friday for the Irregulars, because it’s a stock I’ve written about for them before, but I thought I’d just give them the quick answer to the teaser before I get to a fuller analysis… in case you want to think it through yourself over the next couple days.

Here’s how Ferris teases this idea, which he likens to his “discovery,” a dozen years ago, of Alexander and Baldwin and its undervalued Hawaii land bank:

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“Penny Real Estate: The world’s most valuable land — at a huge discount…

“12 years ago, I never thought I’d see this opportunity again…

“But today I have found an equally rare, extraordinary opportunity, where you can purchase an ownership stake in some of the most potentially valuable real estate in the world… at a fraction of what that land is really worth, today.”

So what’s the stock? Ferris took a trip to see the property:

“I first came across this small company several years ago…

“And recently, on a call with a private money manager, it came up in conversation.

“I decided to take a closer look…

“So I flew thousands of miles to investigate this small company, in one of the wealthiest cities in the country.”

So as I said, here’s the Gumshoe preview: This is Nam Tai Properties (NTP), the former Nam Tai Electronics, which essentially shut down its uncompetitive electronics manufacturing business and is going to turn itself into a property developer using its large properties (originally a factory and a piece of raw land they were planning to use to expand) in one of the Special Economic Zones around Shenzhen, China, where there’s apparently a lot of interest in building up a lot of new mixed-use developments (office centers, apartments, shopping, etc.).

Beyond that, you’re on your own for now — Ferris presented a little info about this at the Value Investing Congress several months ago, but the story has changed a bit so I’ll have to dig in and try to understand it better… join me on Friday and, Lord willing and the creek don’t rise, we’ll be doing just that.

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