Playboy Enterprises: An arbitrage opportunity

Posted Aug 4th 2008 4:57PM by Zac Bissonnette
Filed under: Management

Shares of Playboy Enterprises, Inc. (NYSE: PLA) have tanked this year, hitting a 15-year low today. Some bargain hunters are intrigued and, if you're a fan of Playboy's offering -- or a fan of selling stuff on eBay -- there just might be an arbitrage opportunity here for you:

In his 2007 book A Weekend with Warren Buffett: And Other Shareholder Meeting Adventures, Randy Cepuch writes about the fabulous freebies offered to shareholders who show up for the company's annual meeting in May: a jazz CD, a set of coasters and the latest issue of Playboy.

A quick bit of research:

Playboy Magazine cover price: $5.99
Hef's Favorites CD: $11.98 on Amazon.
Playboy Coasters: Roughly $3 on eBay

What that means is that shares of Playboy are trading at a huge discount to the value of the freebies you get for attending the annual meeting.

Now there are a few problems with this arbitrage opportunity: owning 100 shares will not get you 100 party favors -- this only works with one share. Then there's the trading commission but, if you use a discount broker like Sharebuilder, you'll still come out ahead. Then there's the cost of getting to the meeting.

But if you live near the company's headquarters in Chicago and are a collector of Playboy memorabilia, it is now cheaper to buy the stock and go to the meeting than it is to buy the collectibles on eBay.

Tags: Anual Meetings, AnualMeetings, PLA, Playboy

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Reader Comments (Page 1 of 1)

8-04-2008 @ 5:24PM

Sean said...

That's genius!

9-03-2008 @ 7:57PM

tsaiisbuying said...

the name alone is worth maybe three billion,
forgetting about the real estate, the film library, the online business, licensing, and maybe future casinos and clubs