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Chris DeMuth Jr. is the founder of Rangeley Capital LLC. Rangeley is an investment firm that focuses on event driven, value-oriented investment opportunities. Rangeley Capital and his value investing forum, Sifting the World (StW), search the world for misplaced bets. Rangeley exploits them for... More
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  • Superstition Arbitrage 13 comments
    Jul 9, 2014 1:53 AM

    I am not superstitious. So, I have always been fascinated by real estate discounts due to deaths on a property. In many states, material facts must be disclosed and the standard is for any deaths on a property within the past three years count. I would happily pay a discount and hold it for long enough to season a property beyond the three year materiality standard. So, where can I find the world's biggest discount based on superstition?

    Poveglia Island

    This island is located right outside of Venice, is on the market, and the current high bidder is at 513,000 euros (around $700k). This is an amazing opportunity. It is a gorgeous island right outside of Venice and would make for a perfect little Mediterranean pit stop for sailors. The Italian government is strapped and they have to sell. I always love sellers in a crunch. A beautiful 17-acre island near Venice for under a buck? Yes please.

    Catch? It is the world's biggest price discount due to superstition. It was quarantined due to the plague and subsequently used as a mental asylum. Ghosts are reputed to haunt the island. However, I assign a 0% probability to the island actually being haunted, which leads to these attributes being over weighted in the market price. Yes it is a bit of a fixer upper, but it isn't haunted.

    The Italian government is selling another 148 properties and hopes to raise about half a billion Euros in the process; you might find some other bargains in the pile (but please don't bid on mine!).

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Comments (13)
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  • connellybarnes
    , contributor
    Comments (556) | Send Message
    Ghosts are positive optionality. If you can prove you have scientifically verifiable ghosts, then people would pay you a lot of money to build scientific/military research institutes and horror theme parks.


    People are pricing in ghosts that they don't believe in.
    9 Jul 2014, 02:37 AM Reply Like
  • HFI
    , contributor
    Comments (1775) | Send Message
    Lord! Let's go buy some haunted land.
    9 Jul 2014, 02:57 AM Reply Like
  • gymbo
    , contributor
    Comments (199) | Send Message
    Land? Looks like you get some structures with that too! Would be expensive to operate, but how awesome is that place. I worked in commercial real estate for 20 years and am always amazed at the value missed by market perceptions as well as the overpaying for hot property.
    9 Jul 2014, 11:34 AM Reply Like
  • Squeeky Wheel
    , contributor
    Comments (350) | Send Message
    Did something happen with the buyer in May?
    9 Jul 2014, 01:33 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (1310) | Send Message
    Without any doubt there must be a ghost. And it speaks English. On one of the photo's there is an inscription: "Help me".
    20 Jul 2014, 03:15 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (1310) | Send Message
    BTW we can rule out that a human has written this. Imagine someone travelling from the UK or even the US to this Island, writing "Help me" on one of the walls and then going back. That would be an totally insanely useless excercise. Note also that the inscription seems to have been written a long time ago.
    20 Jul 2014, 03:47 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11433) | Send Message
    Author’s reply » Original high bidder fell through. I tried but in practice won't get it either as it was not a purely economic decision regarding who gets it.
    9 Jul 2014, 01:38 PM Reply Like
  • Squeeky Wheel
    , contributor
    Comments (350) | Send Message
    Looks like an expensive fix up project. And they probably have 'public use' expectations. But I agree it could be a lovely marina.
    10 Jul 2014, 11:46 AM Reply Like
  • TheSandman
    , contributor
    Comments (162) | Send Message
    The best that you can hope for is that the ghosts caught the plague and died away. Poof! No more problem.


    Seriously, the ghosts one can easily dispatch. The plague, or other long-lived disease... well, ask Ken Alibek about the old Soviet Bioweapon facilities:
    22 Jul 2014, 10:01 PM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (1310) | Send Message
    To arbitrage superstition is a nice idea. However doing this by buying real estate is not practical for me. Maybe in China superstition arbitrage is still possible. At least in Taiwan there are people loosing money because they are superstitious:
    1 Oct 2014, 05:11 AM Reply Like
  • Ruerd Heeg
    , contributor
    Comments (1310) | Send Message
    This pair trade in Hong Kong might work: long 4 (death), short 6 (luck). 4 seems much lower valued than 6, at least in terms of P/B and EV/EBIT.


    Also 666 has a Piotroski score of 0 but unfortunately it is not shortable.
    2 Nov 2015, 06:03 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (11433) | Send Message
    Author’s reply » Fun idea, Ruerd Heeg. I have thought about a similar idea for sports betting in Macau.
    2 Nov 2015, 06:19 AM Reply Like
  • sopko.16
    , contributor
    Comments (257) | Send Message
    "The real-life shutter island." :)
    13 Nov 2015, 09:43 AM Reply Like
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