Time-out: A Case Study in Pigeons


Case Study in Pigeon Investing

Times are hard.  Your family has been struggling to make the mortgage payments on your farm since the 50% decline in corn prices.


Your lucky day! You get a call from a friend’s neighbor that he (The Pigeon King) desperately  needs breeders for his growing pigeon business. With a $125,000 investment financed with a second mortgage against your farm you can buy 360 pairs of pigeons at $165 a pair.  Then he offers to buy back the newly bred pigeons for $40 each (pigeons breed prolifically) with a ten-year contract.  He says these pigeons are for racing.  Then he gives you a list of five farmers in your state who are breeding pigeons for him.  Take your time and do your due-diligence, he says.

You check his credit ratings–all good.  No criminal or civil complaints. He owns his farm free and clear–he is a farmer like you!  After meeting with three of the pigeon farmers who confirm with check stubs that he has been paying them on time and as promised. The returns are good–in excess of 80% to 100% in terms of food and overhead to raise the chicks. Considering your time to look over your pigeons, you figure you can net a 50% pre-tax return on your capital. Plus, your contract allows you to sell whatever you produce at the stipulated price, so growth will be profitable.

Also, you hire an investigator to interview the Pigeon King. She sends you this video interview: Making Fowl into good fare—it this a good idea and A successful pigeon farmer

Times are hard. What do you do? Before you decide, you are inspired by

You gotta have dreams and the will to believe!

Pedgeon King

You remember what you learned as a deep value investor over at csinvesting.org and you_________? Why? What INVESTING/BUSINESS principles help you in your decision?

Please write them down now.  Then read on.

Many years later, you notice in the paper:


This article, The Pigeon King (same as the link above but with additional commentary for easier reading) is one of the most amazing stories–a farce, a tragedy, a comedy AND chock full of lessons for the investor.  You may think you are too smart to be a pigeon or a bird-brain (sorry!) but ANYONE can be blind.  What checklist items stop you (besides it’s too good to be true?).

What did YOU learn?

Money for nothing and your chicks for free



6 responses to “Time-out: A Case Study in Pigeons

  1. “The global demand for quality squab at reasonable prices is unlimited,”

    Of course, anyone with any common sense would realise that the global demand for quality squab is 0

  2. Farmers in the province had been left holding an estimated 400,000 pigeons — birds they suddenly had no incentive to keep. There was concern the pigeons could swarm into downtown Toronto like a plague.

    The province’s agricultural ministry was inundated with calls. It gave out advice about euthanasia and resources for proper disposal. Then in July, the agency began clearing out some of the largest barns itself. Crews gassed 175,000 pigeons in five weeks, working 16-hour days, six days a week. An internal assessment noted that, in retrospect, it would have been wise to have grief counselors on hand; many breeders had grown attached to their pigeons.

  3. I would have to disagree with the comment that the global demand for squab is 0. People do in fact pay for squab. I have been to countries in which there were no free flying pigeons, they had all been caged and or consumed. But the 50 dollars per that was quoted, that was absurd; that (wholesale) price was as much as or more than store bought organic, heritage turkey weighing in at 10 to 30 times as much.

    So clearly there was no final market, i.e. consumers would not be paying for such.

  4. My reasons for posting this article:

    An amazing story.
    The promoter/scammer fooled himself. He might have actually believed that he could build a processing plant and sell squab.
    Selling to one customer in a start-up is quite risky with no margin of safety. The contract was worth less than the paper it was written on since on what basis would you have to know the venture could be sustainable. Also, reverting back to the rules of investing–if there were no barriers to entry then growth was not profitable. The opportunity to sell more and more to one buyer was a RED FLAG.

  5. Do you mind if I quote a couple of your articles as long as I provide credit and
    sources back to your webpage? My blog is in the very same niche as yours and my visitors
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    Please let me know if this alright with you. Thanks a lot!

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