Just when you think the story will finally get old, there is always a new development. As most readers know Bruce Berkowitz has found himself in a battle against David Einhorn over the small Florida real estate development company known as St. Joe Company, and it appears that the battle just keeps getting more exciting. As the company's largest investor, Berkowitz has both the pleasure and the trouble of defending St. Joe to the investment world and David Einhorn as being the bear voice.
To add even more to the story,Fortune reported that Berkowitz will be changing St. Joe's board; including an attempt to become Chariman. Berkowitz has since confirmed this statement, and it will definitely be an interesting issue to keep our eyes on in the coming days and weeks.
As the article states, these anticipated changes really do bring about a full series of questions for not only the future of the current board, but for the future of the entire company. It's no secret that St Joe's has been in trouble (reporting major losses for the last three years), but while it does possess assets in the form of almost 600 million acres of land, the current economy and housing market doesn't exactly bring justice when looking at the company.
Berkowitz even stated that St. Joe is "just sort of dead in the water," because even though they have no debts or obligations at this time, they also have no means of generating cash, income, and profits.The possibilities are almost endless in what Berkowitz could do for this company. His (reportedly) proposed replacements could mean a multitude of options ranging from outsourcing to merging the operations, or even taking the drastic measures of acquiring new companies to add to the portfolio.
When news leaked about Berkowitz's decisions of changing the board, the company rose by as much as 11% as of Monday the 7th.
With these these changes, the company Einhorn was shorting could suddenly change. It almost seems inevitable that Berkowitz's board proposal will go through. Due to the current structure of the company he is almost sure to receive the votes necessary for the plan to succeed. Einhorn had also stated in his claim that St. Joe should realistically be trading in the $7 to $9 range, far below its current price . As of Monday that was as high as $30.00, and it doesn't seem to be letting up as Berkowitz almost seems to be locked in on the long term success of the company and not set on making a quick buck (certain provisions in the agreements that he made with the company prevent him from doing so).
Another strike against Einhorn's claims seems to be that he put together a presentation consisting of 139 slides to make a case against St Joe. Included in this presentation were photographs that seem to try and diminish the value of St. Joe as far as property is concerned, and it also seemed like some of the photos that he included suggested that St. Joe had assets consisting of property that really wasn't all that desirable.
As a countermeasure of sorts, Berkowitz had photographers go out and take real pictures of the property which did a bit more than just contrast the differences between Einhorn's photos and what St. Joe actually possessed. You can make the judgment for yourself, but there was definitely a difference between the two sets of photos.
This battle has continued to wage because of conflicting interests. It appears Einhorn, while being known as one of the top researchers in the investment field today, might actually be wrong about St. Joe. In truth, he could have been 100% correct at the time, but now that Berkowitz appears willing to make the necessary commitment and changes to turn St. Joe around, this should certainly cause Einhorn to re-evaluate the company.
This isn't to suggest that Einhorn is wrong and that Berkowitz will turn this company around in no time. In fact, the entire opposite could be true. Even now the future of St. Joe and also their board is being decided and it would be difficult to make wise decisions based upon a company in transition. That being said, some of the conflicting evidence appears to be favoring Berkowitz recently, and also appears to be coming up a little bit short on Einhorn however no one knows for sure except one thing, this story is not going away anytime soon.
Disclosure None
http://www.valuewalk.com/
To add even more to the story,Fortune reported that Berkowitz will be changing St. Joe's board; including an attempt to become Chariman. Berkowitz has since confirmed this statement, and it will definitely be an interesting issue to keep our eyes on in the coming days and weeks.
As the article states, these anticipated changes really do bring about a full series of questions for not only the future of the current board, but for the future of the entire company. It's no secret that St Joe's has been in trouble (reporting major losses for the last three years), but while it does possess assets in the form of almost 600 million acres of land, the current economy and housing market doesn't exactly bring justice when looking at the company.
Berkowitz even stated that St. Joe is "just sort of dead in the water," because even though they have no debts or obligations at this time, they also have no means of generating cash, income, and profits.The possibilities are almost endless in what Berkowitz could do for this company. His (reportedly) proposed replacements could mean a multitude of options ranging from outsourcing to merging the operations, or even taking the drastic measures of acquiring new companies to add to the portfolio.
When news leaked about Berkowitz's decisions of changing the board, the company rose by as much as 11% as of Monday the 7th.
With these these changes, the company Einhorn was shorting could suddenly change. It almost seems inevitable that Berkowitz's board proposal will go through. Due to the current structure of the company he is almost sure to receive the votes necessary for the plan to succeed. Einhorn had also stated in his claim that St. Joe should realistically be trading in the $7 to $9 range, far below its current price . As of Monday that was as high as $30.00, and it doesn't seem to be letting up as Berkowitz almost seems to be locked in on the long term success of the company and not set on making a quick buck (certain provisions in the agreements that he made with the company prevent him from doing so).
Another strike against Einhorn's claims seems to be that he put together a presentation consisting of 139 slides to make a case against St Joe. Included in this presentation were photographs that seem to try and diminish the value of St. Joe as far as property is concerned, and it also seemed like some of the photos that he included suggested that St. Joe had assets consisting of property that really wasn't all that desirable.
As a countermeasure of sorts, Berkowitz had photographers go out and take real pictures of the property which did a bit more than just contrast the differences between Einhorn's photos and what St. Joe actually possessed. You can make the judgment for yourself, but there was definitely a difference between the two sets of photos.
This battle has continued to wage because of conflicting interests. It appears Einhorn, while being known as one of the top researchers in the investment field today, might actually be wrong about St. Joe. In truth, he could have been 100% correct at the time, but now that Berkowitz appears willing to make the necessary commitment and changes to turn St. Joe around, this should certainly cause Einhorn to re-evaluate the company.
This isn't to suggest that Einhorn is wrong and that Berkowitz will turn this company around in no time. In fact, the entire opposite could be true. Even now the future of St. Joe and also their board is being decided and it would be difficult to make wise decisions based upon a company in transition. That being said, some of the conflicting evidence appears to be favoring Berkowitz recently, and also appears to be coming up a little bit short on Einhorn however no one knows for sure except one thing, this story is not going away anytime soon.
Disclosure None
http://www.valuewalk.com/
