Author Topic: JOE - ST. JOE CO  (Read 35282 times)

alertmeipp

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JOE - ST. JOE CO
« on: August 31, 2013, 04:06:38 PM »
I have been watching JOE for quite sometimes, it almost comes down to 52 low. Haven't got time to read into it except a few short / long presentation. Nice to see them being cash flow positive but what's the next catalyst? Development seems to take a long time.

Any holders here care to elaborate why you are holding or buying this co.?


hellsten

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Re: JOE - ST. JOE CO
« Reply #1 on: November 07, 2013, 02:03:49 AM »
There's gold in them thar sink holes? New 52-week low, not far from the lows in 2009. I haven't looked at JOE so far, but I had a quick look now… Q3 report will be released today.

An article about JOE's history, which includes Leucadia, David Einhorn and Bruce Berkowitz:
http://caps.fool.com/Blogs/joe-metamorphosis-moth-or/741860

Video of Berkowitz talking about JOE in 2009:
http://www.rationalwalk.com/?p=9956

My notes:
Quote
Real estate play. 600 000 acres, 70% of land is 15 miles from the Gulf coast. "Lower Alabama". 2% of state of Florida. Last open space. Catalyst is the new international airport. Beautiful land, diverse, rain forest with an airport in the middle.

Largest air force base. Deepwater port of St Joe, close to Panama canal. 20 years late, nobody believes the story. Like the new CEO.

Bought at swamp prices. No debt, patient management, understands the possibilities.

This company should be more a liquidating trust. A real-estate family would love to get a hand on JOE.

They're not making any money, but $3 dollars per share of development made by the government, free cash put into the land.

Port of St Joe:
http://www.portofportstjoe.com/

Quote
access to rail, the U.S. Gulf Intracoastal Waterway, and state and U.S. highways.

One of the port’s greatest assets is the approximately 260 acres of combined ready-to-be-leased lands adjacent to the bulkheads and the more than 5,000 acres of land in the Port environs available for immediate development. Businesses wishing to establish facilities have plenty of room to build and expand.

2012 Annual report:
http://files.shareholder.com/downloads/JOE/2776309462x0x651315/51308a0f-1fe7-45be-84b1-992af80eab29/2012_Annual_Report_Final_.pdf

Quote
We achieved a net profit for the first time since 2007 and we have become optimistic about the recovery of the U.S. housing market. As a result, we are redirecting the Company from defense to offense. That process may produce fluctuating results over the next few years while we build mass and momentum in our businesses, but we are very bullish on the long term prospects for St Joe.

An important offensive play for us in 2012 was the exploration of the retirement demographic as a target market for
new communities. We are pursuing this for a simple reason- statistics show that up to 77 million people in the United
States will be retiring over the next 20 years.


St. Joe was incorporated in 1936 and owns land, timber and resort assets located primarily in Northwest
Florida, Jacksonville, Florida and Tallahassee, Florida. Of the 567,000 acres of land we own, most was acquired
decades ago and, as a result, has a very low initial cost basis, before development costs
. Approximately 403,000
acres, or approximately 71 percent of our total land holdings, are within 15 miles of the coast of the Gulf of
Mexico.

 Specifically, in 2013, we intend to focus on the following initiatives:
➣ Develop opportunities to capitalize on the growing retirement demographic.
➣ Build a portfolio of recurring revenue streams. The creation of long-term recurring revenue streams from our assets is an integral component of our long-term value creation strategy.
➣ Develop new commercial and industrial uses for our land portfolio. We intend to continue exploring
➣ Increase partnerships with best of class operators.
➣ Continue efficient operations.

We currently operate our business in five reportable operating segments:
(1) residential real estate,
(2) commercial real estate,
(3) resorts, leisure and leasing operations,
(4) forestry and
(5) rural land.

In January 2011, the SEC commenced an informal inquiry into our accounting practices for impairment of
investment in real estate assets
and then notified us in June of 2011 that it had issued a related order of private
investigation.

Over the past five years, we have recorded impairment charges of $507.1 million related to real estate
investments.

Most of our raw land assets are managed as timberlands until designated for development.

So we have a company that owns 2% of Florida with many potential catalysts, including demographics and a recovering housing market:

Quote
The majority of rural land sold is undeveloped timberland and is managed as timberland until sold, although
some parcels include the benefits of limited development activity including improved roads, ponds and fencing.
We have traditionally sold parcels of varying sizes ranging from less than one acre to thousands of acres. The
pricing of these parcels varies significantly based on size, location, terrain, timber quality and other local factors
.

Quote
Rural land sales for the three years ended December 31, 2012 included the following:
2012 $3,758 (average price per acre)
2011 $13,374 (average price per acre)
2010 $4,897 (average price per acre)

Quote
Leased 20 acres of the Port St. Joe facility to a regional ship builder, and commenced recognizing rent August 2012;
Closed six commercial property sales in Northwest Florida, consisting of 67 acres, for an aggregate of $10.4 million;
Closed nine rural land sales, consisting of 6,221 acres, for an aggregate of $23.4 million;

$23.5 million related to a 2006 sale of approximately 3,900 acres of rural land to the Florida Department of Transportation

Price per acre:
$10.4 million / 67 acres = $155223 / acre (commercial land)
$23.4 million / 6221 acres = $3761 / acre (rural land)
23.5 million / 3900 acres = $6025 / acre (rural land)

The value of the land is somewhere between, close to, or very far from:
567000 acres * $3761 = 2.1 billion (rural land)
567000 acres * $6025 = 3.4 billion (rural land)
567000 acres * $155223 = 88 billion (commercial land)

The company is now selling at around $2900 per acre, so JOE looks cheap.

There's also this book about JOE's history:
http://www.h-net.org/reviews/showrev.php?id=9301
http://www.amazon.com/exec/obidos/ASIN/0813026970

Quote
Some of St. Joe's most lucrative deals came from selling conservation land to the state, nearly 90,000 acres at more than $182 million.

JOE is clearly no Texas Pacific Land Trust, but Bruce hinted in the interview from 2009 that JOE should perhaps become something similar to TPL:
Quote
"This company should be more a liquidating trust."
« Last Edit: November 07, 2013, 02:18:28 AM by hellsten »

MYDemaray

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Re: JOE - ST. JOE CO
« Reply #2 on: November 07, 2013, 08:35:15 AM »
Quote
Subsequent to the quarter, the Company entered into an agreement to sell approximately 382,834 acres of timberland for $565 million. The final price is subject to adjustments set forth in the sales agreement. The closing is subject to a number of conditions, including approval by the Company’s shareholders. The land to be sold has an aggregate carrying value of approximately $54 million at October 31, 2013. Additional information on the sales agreement can be found in the Company’s press release dated November 7, 2013, and Form 8-K filed with the SEC on November 7, 2013.

Uh..so let me get this straight, $1.9bn market cap, negligible debt, and they just sold non-core assets for $565mn, or ~30% of the market value?  And...short interest is 13mn shares, or 48 days to cover?  Smells like SHLD.

Of course...this is much lower than the price per acre cited above.
« Last Edit: November 07, 2013, 08:38:45 AM by MYDemaray »

ItsAValueTrap

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Re: JOE - ST. JOE CO
« Reply #3 on: November 07, 2013, 09:11:32 AM »
I've been short JOE for a while and have been losing money on my short.

However, I've always thought that the real estate development part was the worst part of St. Joe.  Historically, they haven't made much money doing it if you look at it over the full cycle (the RE boom leading up to 2005/2007 and the RE bust afterwards).

- $565M divided by 382,834 acres is $1476/acre.  The land that they sold was a mix of timberland and rural land.  Yes the land fetches less money than commercial/residential/industrial, but it seems to me that St. Joe sold off its good business and now they are left with the bad business (real estate development).  The rural and timber parts of St. Joe had positive cash flow historically, while real estate development hasn't made much profits or cash flow.
« Last Edit: November 07, 2013, 09:16:42 AM by ItsAValueTrap »
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MYDemaray

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Re: JOE - ST. JOE CO
« Reply #4 on: November 07, 2013, 09:29:50 AM »
Yeah...I went back and re-read the Einhorn presentation, and $1,500/acre was base case for rural land, which all-in got you to $7-10/share in intrinsic.  As he points out, they've basically made all their money selling rural land.  The thesis for the rest requires some leaps of faith.  That said, it's heavily shorted (49 days to cover, 14% of float).  I bought some calls in the PA, which I will probably just flip in a few days.  I'm sure some people will either want to profit take, or get out.

thepupil

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Re: JOE - ST. JOE CO
« Reply #5 on: November 07, 2013, 10:14:20 AM »
how is this good news? They sold land for 1500/acre pre-tax (hopefully they can use some of the writedowns in previous years to offset the gigantic tax inefficiency of selling low basis land for cash) and the company traded well above that value/acre beforehand.

Sure the remaining is more valuable, but it will be sold off very very slowly.

There is the technical short squeeze aspect and the fact that you have a capital allocator in control of the company. I'm just surprised they would do this, unless there is more on the tax end that allows them to not take a huge hit. If there is a way to not take a big tax hit, then $500MM+ in Bruce's/ex LUK guys' hand is better than 385,000 acres of timberland
« Last Edit: November 07, 2013, 10:15:59 AM by thepupil »

dcollon

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Re: JOE - ST. JOE CO
« Reply #6 on: November 13, 2013, 06:05:24 AM »
From WSJ

giofranchi

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Re: JOE - ST. JOE CO
« Reply #7 on: November 13, 2013, 06:07:25 AM »
Portfolio: AAPL, AMZN, BABA, BOSS, BRK.B, FB, FFH, FIH.U, FINX, FWONA, GOOG, IBB, JPM, LBRDA, MKL, NKE, QQQ, SFTBF, SMH, TCEHY, V, XBI, XT

hellsten

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Re: JOE - ST. JOE CO
« Reply #8 on: November 13, 2013, 06:50:30 AM »
From WSJ

Thanks. Sounds like Einhorn is still short and that he's closing the position as soon as the market has reacted to his comments :D

Quote
…meaning he profits if St. Joe's share price falls…

In an interview Monday, Mr. Einhorn said he was vindicated. "This transaction crystallizes the value of St. Joe," he said.

Mr. Einhorn, what about the land and business they didn't sell?

I understand that the new strategy is very risky, but Berkowitz might help them avoid any missteps. No position…

ItsAValueTrap

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Re: JOE - ST. JOE CO
« Reply #9 on: November 13, 2013, 08:16:48 AM »
So if Einhorn's Chipotle Mexican Grill short works badly, what will you guys think of him?


*I am short JOE too... yeah I copied Einhorn.
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