Einhorn Flogs St. Joe

[sdev]

Truly amazing to see how Einhorn isn't even finished with his presentation about St. Joe and shares are down almost 10%...and it's likely that many in the audience own shares.

[beerbaron]

Do you have a copy of the presentation?

 

BeerBaron

[Guest Bronco]

Barrons has a nice write up on this but no slides.

[Guest]

Hmm...who knows more Berkowitz or Einhorn? It'll be interesting.

[drog]

http://www.reuters.com/article/idUSN1325824120101013

 

[Myth465]

I have never really got Joe, I tend to agree with Einhorn having never really looked at the financials or visited Florida lol.  Seems like dead money at best.

[Parsad]

Truly amazing to see how Einhorn isn't even finished with his presentation about St. Joe and shares are down almost 10%...and it's likely that many in the audience own shares.

 

I went to the first VIC and that was it for me.  Every time someone threw out an idea, you could see all these hedge fund managers on their blackberries putting in orders...I'm assuming it was orders...either that, or they were updating their Facebook pages!  ;D  Speaking of Facebook, the move "The Social Network" is the best movie I've seen this year...definitely worth seeing!  Cheers!

[Guest Bronco]

myth - well said.  I think even when you buy these "asset" plays, it can be dead money if those assets aren't monetized and there is no real cash flow.

 

BTW - Your loews just keeps going up - pretty soon you will be complaining that cap gains tax rates are too high with all the taxes you'll be paying on your Loews' windfall.

[Ballinvarosig Investors]

This is why I love investing.

 

You have two people, one of the greatest mutual fund manager of the decade, the other (arguably) the greatest hedge fund manager of the decade. Both have done extensive research on the same company. One comes up with a valuation of $0, the other comes up with at least $40.

[Vish_ram]

here is the 139 page presentation

http://cache.dealbreaker.com/uploads/2010/10/VIC2010Presentation.pdf

 

[Parsad]

Doesn't look like it.  His last 13-F:

 

http://www.sec.gov/Archives/edgar/data/1056831/000105683110000004/0001056831-10-000004-index.htm

 

No subsequent filings indicating he sold any of it since.  Cheers!

 

 

[biaggio]

Thanks for the presentation vish_ram.

 

I can understand why a lot of investors don t want to talk about there short positions. It just seems in bad taste. He strikes me as cocky + obnoxious in the presentation. I used to like Einhorn.

 

It seems that land is dirt cheap in Florida. It seems that rural land at $1800 per acre seems awfully cheap. Developed lots for $30,000 does not seem right either. Everybody should be moving to Florida, as land cost an awful lot more here in Canada + the weather is not as nice (mosquitos or not).

 

 

[Guest]

wasn't einhorn part of the crew that was shorting FFH a while back?

[shalab]

Thank you Sanjeev - my memory is off on this one  :'(

[Guest]

wasn't einhorn part of the crew that was shorting FFH a while back?

 

http://www.deepcapture.com/fairfax-and-just-the-facts-maam/

[Myth465]

This is why I love investing.

 

You have two people, one of the greatest mutual fund manager of the decade, the other (arguably) the greatest hedge fund manager of the decade. Both have done extensive research on the same company. One comes up with a valuation of $0, the other comes up with at least $40.

 

This is also why I love investing. Plus we have Mr. Market keeping score. He sucks over the short term, but is pretty accurate over the long term.

 

myth - well said.  I think even when you buy these "asset" plays, it can be dead money if those assets aren't monetized and there is no real cash flow.

 

BTW - Your loews just keeps going up - pretty soon you will be complaining that cap gains tax rates are too high with all the taxes you'll be paying on your Loews' windfall.

 

Lol Bronco as I said you have a high class problem. One day I hope to join you.

 

 

[beerbaron]

Are you telling me all those analyst and traders woke up today baffled by this presentation? I can't believe anybody would buy a stock like JOE without asking the few questions like:

 

-How many acres are in their balance sheet?

-What was the historical selling price of this land?

-How much of this land can they sell per year?

-Is there demand for the land?

 

So far it looks like a lot of highly paid people on wall street are being tough to do their job. It kinda disgusts me to see that, what a clear lack of due diligence.

 

BeerBaron

[Guest Bronco]

Einhorn vs. Berky - guess who is winning this round?

 

I tried to buy some long dated puts on Joe at a 15 strike yesterday - didn't go through.  Oh well.

 

I guess the stock is already heavily short, but it will be tough for the company to fight this off. 

 

 

 

 

[txlaw]

I find the JOE position puzzling as well.  It's too hard to figure out real estate unless you really know what you're doing and have the ability to do some real due diligence. 

 

It will be interesting to see what Berkowitz does now that he has "gone active."

[Parsad]

Einhorn is right, but if St. Joe doesn't spend too much on developments, they can drag this on a long time by selling rural land.  Anyone short could be in some trouble with any positive news around the company.  And if they do take impairments, they'll do it slowly.  Cheers!

[Parsad]

Incidentally, I wish regulators would follow the Europeans and force short sellers to file their positions over a certain threshold.  I sure would be interested in knowing exactly who else is short St. Joe with Einhorn.  Longs have to file, why shouldn't shorts be required to as well.  I've been arguing and wishing for this for about seven years now!  Cheers!

[RRJ]

Einhorn is right, but if St. Joe doesn't spend too much on developments, they can drag this on a long time by selling rural land.  Anyone short could be in some trouble with any positive news around the company.  And if they do take impairments, they'll do it slowly.  Cheers!

 

I agree.  They might both be wrong.  After researching this a while back, it became one of those stories of seeing potential value, but there is now way to tell when they can unlock it.  Like the Buffett quote from 1999 to Sun Valley group of having two birds in the bush, "but [Aesop] doesn't say when."  They can put off heavy losses more or less until they decide to take them by selling, and Einhorn probably goes a bit too far in trying to be a catalyst by saying they can't cover their expenses -- they've cut those down to skeleton level and appear to be covering them adequately so far.  Things are horrible down there now, true, but that's what piques one's interest for a value investor, right?  Prices will eventually recover, at least somewhat, as there is plenty of good property in the panhandle, and some of the best beaches in the country.  But real estate is a very very long cycle, and it could take 20 years to start to really realize it. 

 

The area around Destin and Panama City Beach got developed hugely between 1990 and 2006.  During those 16 years, property near the beach (say, within block) went from around $100,000 for a third of an acre lot to $1,200,000 a lot, then recently (in past 16 months) has fallen to $350,000 for a lot with a tear down but usable small house.  These anecdotal prices are all for the same lot, and this is based on a friend's personal experience, right around the main St. Joe developments along 30A.  St. Joe has a ton of this type of near-beach-front property, from Tallahassee to Pensacola, which even though a fraction of their 577,000 acres, is probably the lion's share of the value when zoned and eventually developed with upscale amenities.  Maybe there is real value there, but the stock will stay flat for a dozen years or more before it starts to be realized in real estate sales.  Berkowitz and Einhorn would both lose.  I passed because I can't say either what the value really is or when it can be realized.  In the Depression it took real estate values in and around Manhattan 20 years to recover, such that home prices in 1949 were 2/3 of their values from 1929.  That's a serious recovery time.

[nodnub]

Einhorn is right, but if St. Joe doesn't spend too much on developments, they can drag this on a long time by selling rural land.  Anyone short could be in some trouble with any positive news around the company.  And if they do take impairments, they'll do it slowly.  Cheers!

 

I agree.  They might both be wrong.  After researching this a while back, it became one of those stories of seeing potential value, but there is now way to tell when they can unlock it.  Like the Buffett quote from 1999 to Sun Valley group of having two birds in the bush, "but [Aesop] doesn't say when."  They can put off heavy losses more or less until they decide to take them by selling, and Einhorn probably goes a bit too far in trying to be a catalyst by saying they can't cover their expenses -- they've cut those down to skeleton level and appear to be covering them adequately so far.  Things are horrible down there now, true, but that's what piques one's interest for a value investor, right?  Prices will eventually recover, at least somewhat, as there is plenty of good property in the panhandle, and some of the best beaches in the country.  But real estate is a very very long cycle, and it could take 20 years to start to really realize it. 

 

The area around Destin and Panama City Beach got developed hugely between 1990 and 2006.  During those 16 years, property near the beach (say, within block) went from around $100,000 for a third of an acre lot to $1,200,000 a lot, then recently (in past 16 months) has fallen to $350,000 for a lot with a tear down but usable small house.  These anecdotal prices are all for the same lot, and this is based on a friend's personal experience, right around the main St. Joe developments along 30A.  St. Joe has a ton of this type of near-beach-front property, from Tallahassee to Pensacola, which even though a fraction of their 577,000 acres, is probably the lion's share of the value when zoned and eventually developed with upscale amenities.  Maybe there is real value there, but the stock will stay flat for a dozen years or more before it starts to be realized in real estate sales.  Berkowitz and Einhorn would both lose.  I passed because I can't say either what the value really is or when it can be realized.  In the Depression it took real estate values in and around Manhattan 20 years to recover, such that home prices in 1949 were 2/3 of their values from 1929.  That's a serious recovery time.

 

RRJ,

great post, thanks for your perspective

[RRJ]

Or maybe Einhorn has been short a while with no result due to a fairly flat stock price, and decided he needed to really make a splash to knock the stock down a peg short term and cover at least some of his position?  I might believe that if I were cynical and thought the shorts were that manipulative on occasion. What better occasion than VIC to do that? 

[Parsad]

And a 20% drop in two days sure would lift a short's position!  But Einhorn wouldn't be doing anything like that would he?  ;D  Cheers!