Friday, May 18, 2007
Why ABC Funds Bought Playmates

Sounds NSFW, but actually an investing entry, right out of the Graham-and-Dodd playbook. Lots of similarly well-reasoned detective work on Irwin Michael's consistantly useful and amusing site.

"To reduce the volatility of its toy business, in 2001 the Company decided to gradually deploy its excess cash into Hong Kong real estate. The first purchase was its headquarters, The Toy House, located in Kowloon, Hong Kong for roughly HK$520 million. This transaction was followed by the purchase of its factory in 2002 and apartment buildings in 2005 and 2006. The timing of these purchases was fortuitous. The Toy House, purchased during a time of depressed rental rates, is now a retail landmark. Lease rates across both apartment and retail assets are being raised to take advantage of tight occupancy rates. Since 2002, the portfolio’s value has increased by HK$420 million. At the end of 2006, the Company’s real estate had an appraised value of HK$1.2 billion."

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