Photo: St. Joe Company Website
David Einhorn of Greenlight Capital just presented a scathing, 139 slide report on The St. Joe Company to the Value Investors Conference. It has hit the stock already. We’ll have the presentation when it’s made available, but here’s the breakdown of why Einhorn is short the stock.
- St. Joe Company has a significant amount of investments in Florida real estate, both commerical and residential; those investments are largely along the states’ Gulf coast, though some are on the Atlantic coast.
- Those investments appear to be highly overvalued on the balance sheet of St. Joe Company.
- Many of the projects exist as “ghost towns” where no one is living.
- The company has, essentially, not marked the value of these lots and properties to market, and its current balance sheet is, therefore, misleading to investors.
- The company has claimed the value of certain properties would increase in the past, notably via an international airport’s development in Panama City. That airport is now complete.
- The company is suing those companies involved in the oil spill in the Gulf of Mexico. But, according to Einhorn, the company has publicly claimed there is no oil on beaches near their properties.
- Einhorn remarked, when asked if there was anyway he could be wrong about his position, “They could discover real oil” (as in , their properties could be sitting on oil).
Einhorn said he’s been in his short position since 2006.
One audience member noted that famed investor Bruce Berkowitz had, at one time, a position in St. Joe. Einhorn offered to send a letter to Berkowitz’s investors informing them of his findings. Berkowitz did not respond to his offer, according to Einhorn.
The question we were left asking is, considering the weakness of the U.S. real estate market, how many more St. Joe’s are there out there?