In 2012, I found the company undervalued by a substantial margin. It had up to $585 million dollars worth of land and property it could sell to pay off debt, and that it should undergo a special situation to unlock some of the value within the company.

I’d even done my first comparison analysis where I put Dole up against its public competition Chiquita and Fresh Del Monte.

After seeing this; comparing the companies and deciding I had enough margin of safety, I bought the company for myself and the portfolios I manage.

I only held a full position in Dole for 104 days, before selling with a 70% gain, after Dole announced it was selling its worldwide operations to Japanese company Itochu for $1.2 billion.

I continued to hold a half position in Dole because even after a 70% rise, Dole was still undervalued. But by selling out, I was protecting my gains and only risking some of the money I’d already earned.

About a year after this, I sold the rest of my Dole position in all the portfolios I manage because the company announced it was taking the company private at a low ball price, and then started making some crazy decisions.

Below is an unedited excerpt from my book talking about these things.

“As I have been writing, editing, and revising this book, Dole’s Chairman Mr. Murdock has put in an offer to take the company private once again like I thought that he may do, so I wanted to write my thoughts on the ridiculous offer being given to Dole shareholders. I did think that Mr. Murdock may have wanted to take the company private again but what I didn’t expect was the manipulation of the company’s stock price, in my opinion, before that happened.  Shortly after Dole sold its worldwide operations to Itochu, Dole management began to do some very strange things. The value of its land holdings, that Dole management themselves estimated to be worth around $500 million, when they were getting ready to sell their worldwide operations to Itochu, suddenly stated that they thought their land now was worth only around $250 million only a few months later.

This was shocking to me and led me to sell the stock I owned in Dole in my personal portfolio and the portfolios that I manage, because I figured that Dole was doing something untoward to try to get the value of its shares down, so the company could be taken private again at a cheaper valuation. One of my followers on Seeking Alpha and I actually talked about this and both came to the same conclusion that something fishy was going on.

After selling my shares in Dole due to the above situation, I stopped paying attention to the company all together to concentrate on the research of other companies, until it came out that Dole was planning to do a massive buyback of its shares. I thought this was a very good thing for them to do since I found the company to be very undervalued when writing my second article on them, so I started to look into them a little bit again. Before I could do even minimal research into the new situation at Dole, though its management made another very strange decision.  A few days after Dole announced that it was going to buy back $200 million worth of its shares, it changed its mind and all of the sudden decided to update its fleet of container ships instead and canceled the proposed share buyback program.

Of course this sent the share price falling and again led me to believe that its management was trying to manipulate the share price lower so that it could be taken private at an unreasonably low valuation.

Unfortunately, it turns out that I appear to have been right because a month or two after Dole decided to cancel its proposed share buyback program to instead buy new container ships, which of course sent the share price lower, Mr. Murdock announced that he was putting in an offer to take Dole private at $12 a share.

Mr. Murdock brought Dole public in 2009 at $12.50 a share so this in and of itself is ridiculous since the company is much more financially stable now than it was then due to getting rid of its giant debt load. In my opinion this entire situation from the changing of the estimated value of its land by 50%, shortly after announcing that they thought it was worth $500 million, announcing the proposed $200 million share buyback and then a few days later canceling it, and then Mr. Murdock attempting to take the company private again at an incredibly low valuation, should be investigated. If Dole is allowed to be taken private at $12 a share, which it probably will, because Mr. Murdock, at my last check, still owned 40% of the company, then the company should be investigated for manipulating its stock price. If the company is taken private for a paltry $12 per share, then its remaining shareholders are getting screwed.

If a situation like this happens to a company you own, be very careful, trust your research, trust your instincts, and get out of owning the company, if you think you need to. There are a lot of other companies you can spend your time researching and owning rather than spending your precious time and capital having to worry about whether a company’s management is going to screw over shareholders.  Dole’s current shareholders are fighting back by suing the company and I wish them good luck because the proposed buyout offer is ridiculously low.”

Most of the time this would have ended things and shareholders would have no recourse.

But not in this case…

Not only did litigation continue,  but shareholders won a $148 million decision. Below is quoted from the linked article above.

The billionaire chief executive of Dole Food Co., and his top lieutenant must pay $148.2 million of damages to shareholders they shortchanged when the produce company went private in 2013, a Delaware judge ruled on Thursday.

In a decision that may cast a pall on management-led buyouts, Vice Chancellor Travis Laster said, Dole Chief Executive David Murdock, 92, and former Chief Operating Officer C. Michael Carter, were liable for depressing the stock so that Murdock, who owned 40 percent of Dole, could buy the rest at a lowball price.

The judge said the $1.2 billion buyout undervalued Dole by 17 percent, letting Murdock pay $13.50 per share rather than the $16.24 that Dole was worth.

And further down…

JUDGE FINDS FRAUD

Shareholders accused Murdock and Carter of driving down Dole’s share price by downplaying the Westlake Village, California-based company’s ability to boost profit by cutting costs and buying farms, and canceling a stock buyback.

In his 106-page decision, Laster saw Carter as the main engineer of the scheme, calling him Murdock’s “right-hand man’ and saying Carter “actually engaged” in fraud.

Still further down…

But shareholders called the move a power play. Laster appeared to agree, calling Murdock ‘an old-school’, ‘my-way-or-the-highway controller’, fixated on his authority and the power and privileges that came with it.

The judge said, Murdock hurt himself during trial testimony, where defense counsel portrayed him as both a “confused old man” and a disengaged CEO.

“By dint of his prodigious wealth and power, he has grown accustomed to deference and fallen into the habit of characterizing events however he wants,” Laster wrote.

“That habit serves a witness poorly when he faces a skilled cross-examiner who has contrary documents and testimony,” he added.

This is great for Dole’s former shareholders, and should send a message to companies doing terrible things to depress their own stock price.

But all is still not well here…

While the $148 million paid to shareholders is great, it still undervalues the company by a huge margin.

By my conservative estimates, the company was worth somewhere north of $20 a share when taken private. But the judge in Delaware deemed the company to be worth only $16.24 per share, or at least a 19% discount to what I thought Dole was worth.

So while shareholders are getting paid some of this value, I stand by what I said in my book in 2013.

“If a situation like this happens to a company you own be very careful, trust your research, trust your instincts, and get out of owning the company, if you think you need to. There are a lot of other companies you can spend your time researching and owning rather than spending your precious time and capital having to worry about whether a company’s management is going to screw over shareholders.  Dole’s current shareholders are fighting back by suing the company and I wish them good luck because the proposed buyout offer is ridiculously low.”