Bruce Berkowitz of Fairholme Capital is going to present at the Harbor Investment Conference this week from New York City, and some are speculating that he could announce a potential transaction regarding St. Joe at the conference.
Personally, I don’t think he will announce anything major at the conference, like a full takeover of the company, but perhaps he will lay out his thesis on what he believes the company is worth, similar to what David Einhorn of Greenlight Capital did at the Value Investing Congress in October.
Some have said that Einhorn is wrong on this name, despite saying that the company was only worth $7-$10 per share. Shares are far higher than that today, trading around the $27 level, and are higher than when Einhorn discussed it during his presentation. Shares of JOE initially spiked down after Einhorn first revealed his short position in St. Joe, but are now above that October level.
Real estate in Florida is starting to recover, slowly but surely, and over time, the company will be worth far more than what Einhorn says it’s worth. That’s just the nature of real estate.
Perhaps the company will have to take some writedowns for its land, as per the SEC inquiry, but I suspect it won’t be nearly as much as Einhorn thinks.
This has been a battle of the industry titans for some time, and investors will be hanging on to see what Berkowitz has to say on Thursday.
— Roger Nachman