Berkowitz is the founder and managing member of the Fairholme Fund (Trades, Portfolio), which is a part of his Miami-based Fairholme Capital Management. He concentrates his investments in a relatively small number of deeply undervalued companies with great managers. He also invests in companies where there is a clear catalyst event that will close the gap between the market price and intrinsic value.
The St. Joe holding has been a staple in the portfolio for over a decade. It was established in the first quarter of 2009 with the purchase of 18.45 million shares. Since it was added to the portfolio, the holding has seen a few small additions over time with consistent reductions in between.
On March 1, the first reduction of the new year was made to pull back the holding by 2.53%. The guru sold 668,800 shares, which traded at an average price of $50.78 per share. Overall, the sale had a -2.75% impact on the equity portfolio and GuruFocus estimates the total gain of the holding at 102.53%.
St. Joe (JOE, Financial) is one of Florida's largest landowners, with about 573,000 owned acres, of which 70% is located within 15 miles of the Gulf of Mexico. Holdings are concentrated in Walton, Bay, Gulf, Franklin and other counties in the northwest corner of the state. It also owns a few thousand acres in other counties. It has secured entitlement for development on roughly 30,600 of these acres, to include about 16,300 residential units and 10.3 million square feet of commercial space. Several thousand of its entitled acres won't be developed for decades.
On March 15, the stock was trading at $48.41 per share with a market cap of $2.86 billion. According to the GF Value Line, the shares are trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 6 out of 10 and a valuation rank of 2 out of 10. There is currently one severe warning sign issued for new long-term debt. The company's current cash-to-debt ratio of 0.32 ranks it better than 53.09% of the real estate industry.
Berkowitz is the largest shareholder with 43.75% of shares outstanding and his Fairholme Fund (Trades, Portfolio) comes in a close second with 38.55% of shares outstanding. Other top shareholders include T Rowe Price Associates Inc. /MD/ (Trades, Portfolio) and BlackRock Inc. (Trades, Portfolio).
At the end of the fourth quarter, the guru's portfolio contained 20 stocks, with nine new holdings. It was valued at $1.24 billion and has seen a turnover rate of 5%. The top holdings are St. Joe, Bank of America Corp. (BAC, Financial), Berkshire Hathaway Inc. (BRK.B, Financial), Canadian Natural Resources Ltd. (CNQ, Financial) and AT&T Inc. (T, Financial).
By weight, the top sectors represented are real estate (90.79%), energy (3.74%) and financial services (3.62%).
Disclosure: Author owns no stocks mentioned.
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