Member write-up by DAVE ROTTMAN
Kaanapali Land LLC (KANP) is a business that owns land on Maui, one of the major Hawaiian Islands. Because Kaanapali is the name of the region of Maui that Kaanapali Land LLC owns land in, this report will refer to the business as KANP.
The island of Maui was formed by two volcanos that grew next to and eventually into each other. This is referred to as a volcanic doublet. The western part of the doublet is mostly mountainous forest reserves in the interior. Moving “makai”, meaning “towards the sea” in Hawaiian, the landscape changes to agricultural land. Finally, the coastal areas are filled with residential and commercial activity. It is on the western coast of the west side of Maui that Kaanapali is located, minutes away from the Kapalua Airport.
KANP has a rich history going back over 150 years. In the beginning, the company was called the H. Hackfeld & Company and began as a general store opened by a German boat captain, only later branching into other activities such as sugar production land ownership. Through a series of events around the time of World War I, it became acquired by a group of businessman and was renamed American Factors and later Amfac. Amfac was one of the “Big Five” in Hawaii, a powerful group of corporations that controlled 90% of sugarcane production – a huge component of Hawaii’s economy – during part of the 20th century. During this time, sugarcane production was Amfac’s focus, and at its peak it owned 60,000 acres of Hawaiian land. Because of their control over such a huge portion of the economy, the Big Five wielded a large degree of political clout. In the 1950s, political change and international competition damaged the economics of sugarcane production in Hawaii, and the Big Five entered a period of decline that was characterized by declining sugarcane production and diversification into other industries. In 1988, Amfac was bought out by JMB Realty for $920 million, a very large real estate developer based out of Chicago. During the continued period of sugarcane decline, much of the property related to sugarcane and other activities was sold off. In 2002, Amfac declared chapter 11 bankruptcy due to operating losses related to agricultural operations and to a lesser extent other smaller operations including golf course businesses, coupled with an unmanageable debt load. The business emerged from bankruptcy in 2005 as Kaanapali Land, LLC and is the reorganized entity from Amfac Hawaii and a few other entities. The stock became available over the counter in 2007. Today, KANP is focused primarily on land development, although it produces a small amount of coffee, too.
Before proceeding, it is relevant to mention that KANP is similar to another business that has been discussed on Focused Compounding: Maui Land & Pineapple (MLP). If you have not read the report on MLP, it is recommended you do so, as understanding MLP will help with understanding …Read more