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Good Article Defending St. Joe Against Einhorn


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http://www.realestatechannel.com/us-markets/residential-real-estate-1/st-joe-company-david-einhorn-greenlight-capital-buck-horne-raymond-james-morningstar-william-mccalmont-rivertown-northwest-florida-beaches-international-airport-3551.php

 

Raymond James has a "strong buy" on St. Joe stock and argues that the company's new business model is promising.

 

"It appears Greenlight has cherry-picked a few select pieces of documentation, placed them completely out of context or without full disclosure as to what they represent, and then developed a thesis supported by rainy-day pictures and incomplete math," analyst Buck Horne wrote.

 

Morningstar, which spent two days touring land with top management, said much of the "hedge fund's detractions seem rather backward-looking" and sections of the presentation "mocking the rural nature of St. Joe's landholdings look off-the-mark entirely."

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  • 1 month later...

SEC opens investigation into JOE:

 

http://www.streetinsider.com/Corporate+News/TICKER+CORRECTION%3A+SEC+Conducts+Informal+Investigation+into+The+St.+Joe+Co.+%28JOE%29/6208354.html

 

The Securities and Exchange Commission has notified The St. Joe Company (NYSE: JOE) that it is conducting an informal inquiry into St. Joe’s policies and practices concerning impairment of investment in real estate assets.

 

St. Joe intends to cooperate fully with the SEC in connection with the informal inquiry. The notification from the SEC does not indicate any allegations of wrongdoing, and an inquiry is not an indication of any violations of federal securities laws.

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I am SOOOOOO tired of this game. I have no clue as to St Joe and its proper valuation and accounting methods but I will bet you a good sum of money that Mr. Einhorns friends  at the SEC opened up the investigation at his request.

 

 

I thought David Einhorn was on the outs with the SEC precisely because of the fact that he's a vocal short-seller.

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I am SOOOOOO tired of this game. I have no clue as to St Joe and its proper valuation and accounting methods but I will bet you a good sum of money that Mr. Einhorns friends  at the SEC opened up the investigation at his request.

 

I wouldnt bet against Bruce but Joe seems like dead money to me. I dont have decades to see this one through. Einhorn has probably made his money and will be leaving soon inmo.

 

I am also guessing the SEC has enough egg on its face and will listen when Einhorn calls.

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ubuy2wron, you should consider reading Einhorn's book and its tale of the SEC and other authorities' dismissal of everything he says before making that claim.

 

But that's Einhorn's book, correct?  Why would he tell a story any different than his own perspective and experience?  It would be like Jim Chanos writing about his experience around Fairfax and how hard he tried to convince everyone that Prem was a fraud.  I wouldn't read that piece of crap either. 

 

Isn't there an inherent conflict of interest in the fact that he's making a profit on his short, and writing a book about the experience?  Why doesn't he write about his experience at New Century?  Did he attempt to contact the SEC about the fraud there? 

 

http://www.reuters.com/article/idUSN2631813920080327

 

People in glass houses shouldn't throw stones, and Einhorn is one of the biggest chuckers I have seen!  The false sense of nobility that many investors attach to him makes me kind of want to vomit.  He's a smart guy, but so is Sam Antar.  Cheers!

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But that's Einhorn's book, correct?  Why would he tell a story any different than his own perspective and experience?

 

It is Einhorn's book and I expected it to be primarily from his vantage point because it would be understandably difficult to report the story from Allied's vantage point.

 

It would be like Jim Chanos writing about his experience around Fairfax and how hard he tried to convince everyone that Prem was a fraud.  I wouldn't read that piece of crap either.

 

Unknown. I am unfamiliar with that story's details but I dont think thats relevant to the authenticity of Einhorn's claim against Allied and the book that details it. The worst parts of the Allied case have been verified, such as Allied illegally obtaining his phone records. Some more specifics:

 

http://www.reuters.com/article/idUSN2310508920100323  ---> SEC reports its own failure

http://www.nytimes.com/2009/02/01/business/01gret.html?_r=1  ---> SEC reports Allied in violation

http://foolingsomepeople.com/main/the-allied-story/white-papers.html ---> A trove of 3rd party sources describing violations etc.

 

I do not believe that the book is meant to be a marketing or pumping ploy; he already had all the acclaim and ability to raise capital that he could have wanted before writing it and the payoff was small for his fund's size. Rather, I think it was a sincere attempt to highlight plenty of problems that he found in the system in the course of trying to bring a fraud to justice, including getting the authorities to actually act. I'd rather not trash a guy for doing that.

 

Isn't there an inherent conflict of interest in the fact that he's making a profit on his short, and writing a book about the experience?  Why doesn't he write about his experience at New Century?  Did he attempt to contact the SEC about the fraud there? 

 

He disgorged half his profits to charity. And any profits he made on the book are surely miniscule compares to what he makes in his career.

 

You could look at it that way though and say the same about all short sellers who open their mouth at all, but then why not say the same about people going long and declaring their calls? For example, there seems to be a noticeable sumzero effect for small stocks when a post gains traction there. Is that not kosher either?

 

I have a different view and I would love it if someone could challenge it. I see these questions of people's character in issuing short/long reports (traditionally people only dislike short ones though) as being flies in a really big jar of ointment. If it was a small jar, then it would be noticeable and it would matter. But almost always (for liquidity reasons), these are really big jars and as long as the business produces and succeeds, then a short report really does not matter. It's very difficult for an individual to continue a short when the street keeps seeing positive gains QoQ and YoY. And if they can't report positive gains, if the value isnt there, then its worthy of that short report.

And if it's a fraud, then I am wholeheartedly in favor of someone calling it out and getting rewarded for doing so. There isnt enough regulatory power in this world to come to the rescue otherwise. For a very strong example of this, see the plentiful number of recent Chinese equity frauds. And if it's not a fraud? Again, success will overcome a false moniker.

 

Regards,

- CR

 

 

 

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Guest dealraker

Get in your car, or rent a car, and drive all around the Florida St. Joe landholdings.  I've been there.

 

If you can get excited about it- then go for it.

 

I would not pay half the timber value per acre for it.  And I own some land let me tell you.  That's all I'd pay and I'd not feel good at all about it if I did.

 

Now Bruce is a smart cookie, so...

 

 

 

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Mr. Einhorn is a very bright boy and he is prolly a darn good stock picker but he aint no eagle scout.

http://www.deepcapture.com/notes-on-david-einhorn-the-predator-in-a-cute-t-shirt/

 

This is not a criticism but an observation.

 

It surprises me is that Einhorn does not realize that he does not know banks -despite all the publicity of the Lehman short- and keeps trying his fortune in this arena. The one bank long (diluted up to the point of no recovery) and one short (recovered to pre-crisis levels in less than a year ... do not mess with banks in Texas) that I saw in his portfolio both went horribly wrong, and it was not difficult to see why. And when asked recently about banks in Charlie Rose the only thing he could say was some cheap innuendo: "there is much to worry about banks".  And let's not talk about New Century.

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  • 4 weeks later...

When I was kid in Pennsylvania, my neighborhood was surrounded by farmland in all directions.  Now, it is all houses.

 

How many of you could have predicted this?  I wasn't smart enough to see it (although I was 12).

 

My point, and I am not defending BB, is that a lot of people see what's there and maybe he sees what will be there.  Population growth and trends.  I don't know a thing about it.  Maybe he does....

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Well, I don't think this is good news for Einhorn and Tilson's short positions in JOE.  I think Berkowitz most definitely sees things he can do with the business that management was either complacent in executing or ignorant of.  This is good news for JOE shareholders.  Cheers!

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Well, I don't think this is good news for Einhorn and Tilson's short positions in JOE.  I think Berkowitz most definitely sees things he can do with the business that management was either complacent in executing or ignorant of.  This is good news for JOE shareholders.  Cheers!

 

Here's the truth about real estate development.  The farther out you are, the longer it takes to become profitable.  There is a new town, now an exurb of a major metro area.  It's a wonderful, planned community, one of the top ten places to live in the US, according to some surveys.  The planning, promotion, development and management were superb.  But, because of its far out location, the development company went through two bankruptcies and three decades of losses before it finally became profitable.  Considering the bankruptcies, the project had negative returns, overall.

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Parsad - even if Einhorn is right this could be a horrible short.  I agree with you that shorts may be in trouble.  Clearly, this is not a company that is going to 0, which you could have argued about some financials Einhorn was involved with (LEH). 

 

Whether JOE is overpriced or not has now become irrelevant. 

 

I'll sit and watch this from the sidelines...time to review Loew's earnings.

 

 

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Hmmm...pretty different images, huh!  Surprise, surprise.  Why did I think that Einhorn's original presentation was just overblown hype? 

 

I agree that there may be some possible writedowns, and they may have been slow in doing so, but is there permanent impairment?  Einhorn suggests yes, while Berkowitz suggests no.  I believe the latter! 

 

This was the same thing these turkeys were saying about Fairfax.  Run the business into the ground, regardless of whether it can actually survive or not.  Think "The Story of Dendreon" on Deepcapture.  Unsavory ethics in my opinion and unsavory associations.  Cheers!

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  • 4 weeks later...
  • 2 months later...

I just bought JOE for my portfolio and discussed my rationale on my blog, www.mevsemt.blogspot.com, in case anyone's interested.  Ultimately, I think there's a distinct possibility that over the next 10-15 years JOE evolves from a real estate company into something more like a LUK of BAM.  Thoughts?

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