While fishing in Montana several years ago, I once caught a bird and a fish at the exact same time.
As I felt the fish tug my line one way, I was surprised to feel the line also tugging in a different direction. Here, a small bird dive bombing for insects got one its wings tangled in my line, and was desperately trying to fly away. What a dilemma.
I wanted the trout on my line, but I didn't want the bird. My fishing buddy and I carefully pulled the line in order to free the bird before it became injured, which we did. As it flew away, I turned my attention back to the trout, which wiggled its way free just as I pulled it out of the water. A nice-looking trout got away courtesy of a little bird.
I wanted the fish, but not the bird. That's now a metaphor that has investment applications in my world of value. Take Alexander and Baldwin (ALEX) for instance. I originally took a stake because of the company's compelling portfolio of Hawaiian real estate, which was carried on the books at next to nothing. That was my fish. I did not care a whole lot about the company's shipping business, despite the fact that it generated the bulk of the revenue. Don't get me wrong, it's a very good business and perhaps shielded the real estate from view, at least before the company started drawing greater interest. It just wasn't what drew me to the company.
In this case, I'll ultimately have the choice of which A&B's businesses I want to own, as the company will be separating into two publicly-traded companies, Alexander and Baldwin (real estate) and Matson (transportation and logistics), sometime in the second half of 2012. Matson will pay a dividend of between $0.50 and $0.70 per year, while Alexander and Baldwin will not pay a dividend, at least initially. I may end up keeping both of them or selling one and buying more of the other, depending on valuation.
In Premier Exhibition's (PRXI) case, it was the Titanic assets I wanted and not the exhibition business. The exhibition business, best known because of "Bodies ... The Exhibition," once had great promise and Premier was a $17 stock back in 2007. But a recession, some bad press and overly-optimistic expectations sent shares below $1 in 2008. The company's announcement in September that it was separating operations into two divisions, Premier Exhibition Management and RMS Titanic, set the stage for the Premier putting the Titanic artifacts on the auction block. Conceivably, if the right bidder comes along Premier may be able to sell the entire RMS Titanic unit. That's where the potential value is in this company, the fish in this example.
Any value attributed to the exhibition business is gravy, in my view. This story still has a couple of months to play out, as the auction results will be released on April 15. There are no guarantees that a deal will get done, but this is perhaps the greatest collection ever to come to auction.
