Author Topic: JOE - ST. JOE CO  (Read 32573 times)

Saluki

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Re: JOE - ST. JOE CO
« Reply #80 on: June 14, 2018, 10:54:55 AM »
What happens if Berkowitz is a forced seller? Any thoughts on if the 3 SEC attorney that Kerrisdale talked to had it right?

1.  Well, if they are a forced seller that won't hurt JOE, only the stock price, which would allow me to purchase more at firesale prices, if it still looked like a good company with a long runway.

2.  Fairholme sold less than 1.5% of their position last quarter, and they have been having lots of redemptions due to losses from SHLD, I believe, so their attorney probably has a different opinion than Kerrisdale's.  This is not unusual, a lot of Supreme court cases are 5-4, so if clones of the Justices were in private practice, nearly half would've given you the "wrong" answer.

3.  From scanning the rule I note that the fund has some discretion in how to classify their positions.  It could be that they see it differently or they are calculating the position differently.  For example, what if Bruce B says "don't count my money in the fund in calculating how many days it would take to sell the position because I'm not redeeming, so the calculation should be based on the non-insider investor funds." I'm not saying it's right, just that it's possible.

4.  Treasury asked the SEC to postpone the December 2018 effective date of that liquidity rule.  See pp 34-35 here

https://www.treasury.gov/press-center/press-releases/Documents/A-Financial-System-That-Creates-Economic-Opportunities-Asset_Management-Insurance.pdf

The SEC is an independent agency and doesn't have to follow the recommendations, but i'd be surprised if they didn't consider them and talk it over with Treasury. 

5.  A fund can also write to the SEC for a "no-action" letter to allow them to hold the position even if it's not complying with the rules.  The SEC could deny it, then they would have to sell (or litigate it if they thought the SEC was wrong, which is what happened when the SEC tried to register hedge funds and their rule was overturned by the courts) but it would be a very aggressive act for them to go after a fund while the no-action is under consideration.
If it's important, do it every day. If it's not important, don't do it at all.  -Dan Gable


SI

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Re: JOE - ST. JOE CO
« Reply #81 on: June 14, 2018, 11:45:29 AM »
all good points, thanks Saluki.

thepupil

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Re: JOE - ST. JOE CO
« Reply #82 on: June 14, 2018, 12:15:16 PM »
As a last resort, couldn't Fairholme just distribute JOE (or anything else) to FAIRX holders?

http://www.fairholmefundsinc.com/Prospectus/StatutoryProspectus.pdf

Quote
For redemptions paid in cash, each Fund typically expects to meet
redemption requests using the Fundís then-existing holdings of cash or cash equivalents. Subject to market conditions and other
considerations, at times, such as during stressed market conditions, a Fund may use proceeds from the sale of securities to meet
redemption requests. Unless otherwise prohibited by law, each Fund also reserves the right to pay redemptions in kind, using
portfolio securities to pay redemption proceeds, and may meet redemption requests partly in cash and partly in portfolio
securities.


LongTermView

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Re: JOE - ST. JOE CO
« Reply #83 on: June 14, 2018, 04:05:30 PM »
I should take a drive.
It's only 2 hours away & I want to visit some of the venues along 30A.

I wouldn't mind checking it out. Let me know if this turns into a group field trip.

rkbabang

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Re: JOE - ST. JOE CO
« Reply #84 on: June 14, 2018, 05:03:44 PM »
I should take a drive.
It's only 2 hours away & I want to visit some of the venues along 30A.

I wouldn't mind checking it out. Let me know if this turns into a group field trip.

I have no plans to go to Florida, but Iíd love to hear what you guys think if you check it out.  Iím also looking forward to Kuppyís part two of his blog post.  Iíve been looking for something real estate related.

Iíve also been looking at retail focused REITs lately, trying to find something with high quality shopping centers rather than malls since the whole sector has taken a beating. Kimco maybe, or like Kimco, but smaller.
« Last Edit: June 14, 2018, 05:22:20 PM by rkbabang »

Saluki

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Re: JOE - ST. JOE CO
« Reply #85 on: June 15, 2018, 03:22:10 PM »
As a last resort, couldn't Fairholme just distribute JOE (or anything else) to FAIRX holders?

http://www.fairholmefundsinc.com/Prospectus/StatutoryProspectus.pdf

Quote
For redemptions paid in cash, each Fund typically expects to meet
redemption requests using the Fundís then-existing holdings of cash or cash equivalents. Subject to market conditions and other
considerations, at times, such as during stressed market conditions, a Fund may use proceeds from the sale of securities to meet
redemption requests. Unless otherwise prohibited by law, each Fund also reserves the right to pay redemptions in kind, using
portfolio securities to pay redemption proceeds, and may meet redemption requests partly in cash and partly in portfolio
securities.

Well, I don't know if that is enough to comply with the rule but it's certainly something that they could bring up if they were asking for a no-action letter (i.e. our customers have known we've had this position for a decade and they knew the plan for emergency liquidation if it was needed).  Also, they could ask that their old positions be grandfathered in and could, ironically, cite to the Kerrisdale report for arguing that they should get it because they could be harmed by short sellers if forced to sell publicly. 

Also, I did some more googling and it looks like the SEC postponed the rule effective date:

https://www.sec.gov/rules/interim/2018/ic-33010.pdf

So for large funds (over $1billion) they have until June 2019 to comply (absent a no-action or interpretive letter) and for smaller funds they have until Dec 2019 to comply. 
If it's important, do it every day. If it's not important, don't do it at all.  -Dan Gable