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St. Joe Announces Change in Strategy


BargainValueHunter
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http://seekingalpha.com/news-article/2141388-the-st-joe-company-adopts-new-real-estate-investment-strategy

 

In 2011, the new Board directed management to reduce expenses. We have met that goal and, as a result, we currently expect to have positive operating cash flow in 2012, excluding discretionary capital expenditures. The next request of our Board was the evaluation of our assets and development of a strategy to reduce future capital outlays and enhance the risk-adjusted return on investment while continuing to minimize potential risk to the Company in light of uncertain economic conditions. We believe that this new strategy will fulfill that request said Park Brady.
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Seems like they are squeezing costs to the bare minimum, continue to selectively monetize real estate, and build up cash assets.  Will they then redploy cash to other non-real estate investments, a la Berkshire and become an investing holding company????

 

A good strategy if you own a cash cow and have a record of making good investments.

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More from the Journal...

 

http://online.wsj.com/article/SB10001424052970203363504577187293030118950.html

 

The strategy shift also seems to validate some of the assertions made by St. Joe's critics, who have argued that the company is overvalued. In October 2010, David Einhorn, president of the hedge-fund firm Greenlight Capital Inc., publicly questioned the company's accounting practices at a popular investment conference, saying St. Joe had valued some of its land too high on its balance sheet.

 

Mr. Einhorn, who at the time had placed bets that St. Joe's stock would fall, suggested that the company should have written down the value of its assets by about two-thirds.

 

On Friday, Mr. Einhorn said in an emailed statement, "Today's news confirms our view that St. Joe's land is worth less than they thought and that it can't be developed profitably."

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