According to GuruFocus Data, Investment Guru Bruce Berkowitz of has recently bought 4.6 million more shares of The St. Joe Company (JOE, Financial), bringing his total stake in the company to 15.6 million shares, or 16.93% of total shares outstanding.
Data also shows he stated to take a position in JOE in late 2007, when he bought 3.6 million shares at an average price of 31.4. He has increased his position in the Florida land owner, and real estate developer and operator steadily through 2008. Here is the trading and holding history
As we reviewed in in this article in GuruFocus Research, Bruce Berkowitz likes to concentrate his investments on the best ideas, and he likes company generate a lot of free cash flow. Betting about $400 million on one stock, even for a man like Bruce Berkowitz who manages $6.7 billion is significant.
Why Bruce Berkowitz likes the company so much that he keeps on buying it? After all, being in the beach front facing the economic tsunami, haven’t almost real estate developers been killed these days? St. Joe’s stock itsekf dropped more than 70% from about $85 in the mid of 2005 to $24 per share today. He rationalize his investment decision in this January 2009 interview with Kiplinger
Well said, Bruce! Even the lack of free cash flow is being taken care of by the government.
It may take some time before the value of the land gets fully realized, but it will. In the meantime, it is reassuring that the company has very little debt ($50 million vs. $1.0 billion equity and over $100 million cash as of September 30, 2008). In times like this, companies having a lot of debt are swimming naked, but St. Joe is staying on the beach, literally.
GuruFocus 10-Year valuation tool shows that the company is close to its historical low in terms of P/E, P/S, and P/B (click on colored lines next to the legends to show or hide the tracks):
(10-year valuation chart is a feature for Premium Members. Take a 7-day Free Trial)
Data also shows he stated to take a position in JOE in late 2007, when he bought 3.6 million shares at an average price of 31.4. He has increased his position in the Florida land owner, and real estate developer and operator steadily through 2008. Here is the trading and holding history
As we reviewed in in this article in GuruFocus Research, Bruce Berkowitz likes to concentrate his investments on the best ideas, and he likes company generate a lot of free cash flow. Betting about $400 million on one stock, even for a man like Bruce Berkowitz who manages $6.7 billion is significant.
Why Bruce Berkowitz likes the company so much that he keeps on buying it? After all, being in the beach front facing the economic tsunami, haven’t almost real estate developers been killed these days? St. Joe’s stock itsekf dropped more than 70% from about $85 in the mid of 2005 to $24 per share today. He rationalize his investment decision in this January 2009 interview with Kiplinger
One of your other major holdings is St. Joe, the biggest private landowner in Florida. Will the Florida real estate depression kill St. Joe?
It was being killed by a bad CEO, who is no longer there. The new guy, Britt Greene, is good. The company owns more than 600,000 acres of land in northwest Florida. About 50% of it is within 15 miles of the Gulf Coast. It is the largest piece of good, privately owned land left in the U.S. And the first new international airport since Denver is right now being plunked in the middle of St. Joe’s land in Bay County, about 41 miles from Tallahassee.
And St. Joe owns everything around this airport?
Yes. The weather is great, the beaches are gorgeous, and the ecosystem is comparable to the rainforest. Every real estate guy in the world would love to own this land, but they all depend on borrowed money, and they don’t have it now. Granted, the company doesn’t have the free cash flow, but it’s debt-free and we’re buying beach land for swamp values.
We paid, on average, $32 or $33 for our shares, and I know Joe is worth more than what we paid. It has a stock-market capitalization of $2.6 billion. Over the next ten years, the state alone is going to put $2.6 billion of infrastructure into the land. Suppose you owned a plot of land on a beach and the state came up to you and said, “I’d like to build a road to your house. I’d like to give you the water system and electricity. I’d like to plant some trees, make it all nice. By the way, I’m going to plunk down a little airport right next to your house so that you can get in and out easily. And we’ll also maintain the land, forever.” You could consider that to be free cash flow.
Well said, Bruce! Even the lack of free cash flow is being taken care of by the government.
It may take some time before the value of the land gets fully realized, but it will. In the meantime, it is reassuring that the company has very little debt ($50 million vs. $1.0 billion equity and over $100 million cash as of September 30, 2008). In times like this, companies having a lot of debt are swimming naked, but St. Joe is staying on the beach, literally.
GuruFocus 10-Year valuation tool shows that the company is close to its historical low in terms of P/E, P/S, and P/B (click on colored lines next to the legends to show or hide the tracks):
(10-year valuation chart is a feature for Premium Members. Take a 7-day Free Trial)
