St. Joe Filing - Credit Agreement and SEC Investigation

[Parsad]

In a filing today, JOE has announced that they have terminated their credit agreement which prevented them from buying back shares.  Also the SEC is investigating issues related to the impairment of JOE real estate assets.  I wonder who made a call to the SEC?  Cheers!

 

http://www.sec.gov/Archives/edgar/data/745308/000095012311063723/b87177e8vk.htm

[moore_capital54]

Einhorn!

[Parsad]

No, no...that would be pure speculation!  Why does everyone always blame the shorts?  ;D  Cheers!

[biaggio]

Maybe they will make some acquisitions + convert it into a financial Co.

 

Mr Berkowitz describe JOE as an asset manager:

 

"“St. Joe, at its core, is an asset management company,’’ Berkowitz said. “Successful asset management companies are very profitable. There’s no reason St. Joe can’t be profitable.’’

http://seekingalpha.com/article/260566-berkowitz-should-unlock-st-joe-s-value

 

Could he use the cash to purchase an undervalued insurance company. Maybe one that is a good underwriter but has trouble investing the float. i.e create an investment vehicle similar to WEB and Mr Watsa.

 

I think this might be wishful thinking on my part. I own a small stake in JOE.

[moore_capital54]

Completely off topic, but I have been using Google+ and I genuinely feel this thing has the potential to destroy the whole facebook experience. Its far superior.

[moore_capital54]

Berkowitz is apparently being targeted as well:

 

http://www.bloomberg.com/news/2011-07-01/st-joe-says-sec-is-investigating-financial-reports-and-chairman-berkowitz.html

[eclecticvalue]

uh-oh hope this doesn't look good for Berkowitz!!! Hope his reputation will not be tarnished.

 

Hey Moorecapital can I get an invite for google+ sorry to be offtopic but I am looking for one also. I want to really try it out.

[BargainValueHunter]

Wall Street Journal posts a correction regarding Mr. Berkowitz:

 

 

http://online.wsj.com/article/SB10001424052702304450604576420482581348302.html

 

An earlier version of this story said that the company and its chairman are the subject of a fraud investigation. While the company said the SEC investigation covers a variety of issues including those covered by antifraud provisions of the federal securities laws, Mr. Berkowitz was not named in that part of the investigation..

 

 

[twacowfca]

Wall Street Journal posts a correction regarding Mr. Berkowitz:

 

 

http://online.wsj.com/article/SB10001424052702304450604576420482581348302.html

 

An earlier version of this story said that the company and its chairman are the subject of a fraud investigation. While the company said the SEC investigation covers a variety of issues including those covered by antifraud provisions of the federal securities laws, Mr. Berkowitz was not named in that part of the investigation..

 

 

 

Thanks for posting the clarification.  It would be sad to see a good man brought down through guilt by association.

[Parsad]

Wall Street Journal posts a correction regarding Mr. Berkowitz:

 

 

http://online.wsj.com/article/SB10001424052702304450604576420482581348302.html

 

An earlier version of this story said that the company and its chairman are the subject of a fraud investigation. While the company said the SEC investigation covers a variety of issues including those covered by antifraud provisions of the federal securities laws, Mr. Berkowitz was not named in that part of the investigation..

 

 

 

Thanks for posting the clarification.  It would be sad to see a good man brought down through guilt by association.

 

Problem is that other news sources picked up the article and the insinuation that Berkowitz was also under investigation:

 

http://www.bloomberg.com/news/2011-07-01/st-joe-says-sec-is-investigating-financial-reports-and-chairman-berkowitz.html

 

It's too late!  Damage is done.  Most news sources won't pick up the correction.

 

You guys think there won't be redemption orders for the Fairholme Fund coming in Tuesday morning?  Cheers!

[BargainValueHunter]

Yeah.

 

Since old "Bernie Made Off with everybody's cash" it seems like the CNBC'ers are just itching for another one (ratings).

 

Well at least I can pick up some AIG and JOE on Tuesday morning at good prices.  ::)

 

Safe holiday, y'all.  :)

[BargainValueHunter]

Bruce B.'s contentious interview with Bloomberg 7/5/11:

 

http://www.bloomberg.com/video/71900634/

[frog03]

Bruce is having a really bad year so far.  Too early to call his performance mean-reverting but his value added since 1997 must be like 6 points vs the S&P 500 total return (he seriously underperformed in his managed accounts the couple years opening his mutual fund).  Now good old Eric Sprott who is also taken a beating this year has outperformed the TSX by about 13 points in his mutual fund.

[biaggio]

he's trying be a hedge fund manager in a mutual fund structure.

 

Do you think he would be better off in a different structure e.g. insurance like Prem Watsa or just traditional hedge fund?

 

or just stay as a mutual fund (the mutual fund redemptions gotta hurt, usually occurring just when things are getting cheaper)

[Parsad]

or just stay as a mutual fund (the mutual fund redemptions gotta hurt, usually occurring just when things are getting cheaper)

 

That's usually how it works.  People pull their money when they should be putting more in.  Bruce will be proven correct on alot of these things he's bought.  Cheers!

[Guest Hester]

or just stay as a mutual fund (the mutual fund redemptions gotta hurt, usually occurring just when things are getting cheaper)

 

That's usually how it works.  People pull their money when they should be putting more in.  Bruce will be proven correct on alot of these things he's bought.  Cheers!

 

I agree

 

http://finance.yahoo.com/news/Big-Bragging-Rights-For-indie-509845471.html?x=0&.v=1

"Over the last ten years, the $3.7 billion CGM Focus Fund accrued annualized gains of an average 18% -- more than 300 basis points better than its next closest rival according to The Journal. However, if you've invested in the fund over the last ten years, chances are you're kicking yourself. That's because the average CGM Focus shareholder lost -11% annually in the decade ended November 30."

 

 

[biaggio]

 

if you are a star manager why would you be running a mutual fund?

 

And specifically why does Berkowitz continue to run Fairholme / mutual fund

[Parsad]

 

if you are a star manager why would you be running a mutual fund?

 

And specifically why does Berkowitz continue to run Fairholme / mutual fund

 

A sense of loyalty to the investors who trusted him from day one?  Also, possibly because this vehicle is available to all investors, whereas an investment fund would be limited to accredited investors only.  Cheers!

[Guest misterstockwell]

I had clients in FAIRX for years, but got worried about the size of the fund, and then lost the faith with the whole JOE issue. I sold it all about a month ago.

[moore_capital54]

Another reason might be that  @18B in assets, Berkowitz is making $180M a year come rain or shine???

[Parsad]

Another reason might be that  @18B in assets, Berkowitz is making $180M a year come rain or shine???

 

He could make far more with a "1 & 20" compensation plan in a hedge fund. 

 

I think folks are too hard on this guy.  He's done better than 99% of fund managers and investors since inception, and people are now thinking he's suddenly become retarded.  In a couple of years when his bets have paid off, they'll think he's a genius again. 

 

I hear the same crap about Mohnish, Francis, Tim, etc.  A couple of weeks ago there were posters saying what a dweeb Arne Van Den Berg was.  Now it's Berkowitz.  Next week it will be someone else!  You'd think I'd be used to hearing all this junk!  Cheers!

[S2S]

^ Agreed, for the most part. However Fairholme's numbers this year (and likely the next) will NOT look pretty; and the fund outflow and subsequently forced selling or missed opportunities won't help.

 

or just stay as a mutual fund (the mutual fund redemptions gotta hurt, usually occurring just when things are getting cheaper)

 

That's usually how it works.  People pull their money when they should be putting more in.  Bruce will be proven correct on alot of these things he's bought.  Cheers!

 

I agree

 

http://finance.yahoo.com/news/Big-Bragging-Rights-For-indie-509845471.html?x=0&.v=1

"Over the last ten years, the $3.7 billion CGM Focus Fund accrued annualized gains of an average 18% -- more than 300 basis points better than its next closest rival according to The Journal. However, if you've invested in the fund over the last ten years, chances are you're kicking yourself. That's because the average CGM Focus shareholder lost -11% annually in the decade ended November 30."

 

 

 

Another thing (which might or might not be reflected in The Journal's calculation) about Ken Heebner is he changes his mind on stocks too often ;D and thus the fund consistently records very high turnover ratio (annual turnover currently sits at 363%). More often than not, the style leaves taxable accounts with outrageously high CGT bills.

[bargainman]

 

if you are a star manager why would you be running a mutual fund?

 

And specifically why does Berkowitz continue to run Fairholme / mutual fund

 

A sense of loyalty to the investors who trusted him from day one?  Also, possibly because this vehicle is available to all investors, whereas an investment fund would be limited to accredited investors only.  Cheers!

 

Greenblatt has a few other gems in this video (and in his newest book)

http://blogs.forbes.com/steveforbes/2011/07/05/joel-greenblatt-interview-transcript/

 

" if you look at top performers over the last decade, the top 25% of managers that have outperformed – came out with the best record for the last ten years – 97% of those top managers spent at least three years in the bottom half of performance.

 

79% spent at least three years in the bottom quartile of performance.  And almost half, 47%, spent at least three years in the bottom 10% of performance"

 

Bruce has stated numerous times in interviews that he chose a mutual fund structure and a relatively modest fee of 1% because it's accessible to everyone.  Given his record he could have easily gone after a 2/20 or 1/20.  He was also managing a reasonable amount of money as a broker before he opened up FAIRX.

[rjstc]

Another reason might be that  @18B in assets, Berkowitz is making $180M a year come rain or shine???

 

He could make far more with a "1 & 20" compensation plan in a hedge fund. 

 

I think folks are too hard on this guy.  He's done better than 99% of fund managers and investors since inception, and people are now thinking he's suddenly become retarded.  In a couple of years when his bets have paid off, they'll think he's a genius again. 

 

I hear the same crap about Mohnish, Francis, Tim, etc.  A couple of weeks ago there were posters saying what a dweeb Arne Van Den Berg was.  Now it's Berkowitz.  Next week it will be someone else!  You'd think I'd be used to hearing all this junk!  Cheers!

Are you saying that because for the first 29 years Van Den Berg did great but for the last 10 years he hasn't even beaten  the S&P we should claim he's still doing great for his investors? I am speaking about performance numbers from his own web site by the way. Hopefully he'll come back strong. Maybe you can put him in a strong performance category, I myself can't. No one was questioning that Arne in not a great guy by the way. This year he's doing better. Hopefully for his investors he'll continue. He wasn't for me and I pulled out. Luckily it was before 2008.

  Also I invested with Berkowitz when he first started his fund and added money all the way up til now. I'm sure he'll bounce back at some point, but my gripe now is his involvement with Joe. It would be like if I hired him to manage my money in a mutual fund which he did great at. Then he decided to go off part time running a hard to operate business. Now I'm all confused. Is he going to be a hedge fund? Mutual fund? Property manager? I hired him to be a mutual fund manager! I stuck with him through 2008-2009 when his fund went from the low 30s to the mid teens. I knew what he was doing and I knew he was going through a rough time but he was concentrating on his mutual fund business and would come back. Now I've sold off about 75% and will put my money somewhere else for now. I have to agree with mrstockwells comments.

 

 

 

[Parsad]

Also I invested with Berkowitz when he first started his fund and added money all the way up til now. I'm sure he'll bounce back at some point, but my gripe now is his involvement with Joe. It would be like if I hired him to manage my money in a mutual fund which he did great at. Then he decided to go off part time running a hard to operate business. Now I'm all confused. Is he going to be a hedge fund? Mutual fund? Property manager? I hired him to be a mutual fund manager! I stuck with him through 2008-2009 when his fund went from the low 30s to the mid teens. I knew what he was doing and I knew he was going through a rough time but he was concentrating on his mutual fund business and would come back. Now I've sold off about 75% and will put my money somewhere else for now. I have to agree with mrstockwells comments.

 

I think that's kind of what my point is.  You trusted him for some time, and he did very well for you, yet now you are second guessing his judgement after he's been involved in this venture for about six months.  10 years versus six months.  It's why investors pull money at the bottom. 

 

Take a look at Mohnish's fund.  He was down nearly 70%, yet one of my own partners, whose family had capital with Mohnish, were thinking of pulling.  I told them that he didn't suddenly become stupid.  That it will take time, but he has more vested than anyone else, and would probably make their money back.  It may take some time, but he would most likely earn it back, and in the meantime he wasn't getting paid a cent. 

 

They stayed put and made their money back faster than I ever thought, or they thought!  So Mohnish did poorly over a year and a half...in fact almost catastrophically...yet the "smart money" were all itching to pull out, forgetting about the first nine years of the fund.  Many would have pulled out if the lock-up wasn't in place.  They would have all shot themselves in the foot.  The same thing happened in late 2009 with Francis' fund, and in the last couple of years it seems to be happening with Tim's fund as well.

 

Am I saying that the majority of people are probably shooting themselves in the foot by pulling their money out of Fairholme, Chou Funds, Century Management, McElvaine, Berkshire, etc?  Who knows and only time will tell.  But my money is on "yes"!  Cheers!