Fairholme Capital Talks About St. Joe Investment With Bloomberg Television
Bruce Berkowitz, founder of Fairholme Capital Management LLC and chairman of controversial Florida real estate company St. Joe Co., appeared on Bloomberg TV early this morning to discuss the SEC's formal investigation of him and St. Joe.
Berkowitz said he voluntarily issued the 8K disclosure on St. Joe on Friday evening, and that he intends to repurchase shares of the company on the open market at an undisclosed time. Highlights can be found below, courtesy of Bloomberg Television. The video can be viewed here.
Berkowitz on the SEC's formal investigation into him and St. Joe:
“Let's talk about Fairholme. Fairholme has not been contacted by the SEC about Rule 13D. I know only at this point what has been reported by St. Joe. 13D is about reporting requirements if you are an over 5% holder. The SEC notified St. Joe that they're going to talk to all 5% plus shareholders about reporting requirements. So that's about it for Fairholme.”
"Fairholme has a strong relationship with the SEC. We're subject to all sorts of regulations. We believe in transparency with our regulators. We've always cooperated with requests. It's a priority for us and as an institutional investor, the more attention the SEC pays to accurate disclosure…it's better for Fairholme."
"Fairholme's intervention in St. Joe was unusual for Fairholme and it was unusual for a mutual fund. I'm sure lots people are curious about it. Mutual funds usually don't become activists, and own almost 30% of a company. But it had to be done. At Fairholme we're proud of what we did at St. Joe and the speed of the way we changed things without any damage to St. Joe. St. Joe's on track to being a well-governed and productive part of the portfolio. I think it was a success and we'd do exactly the same thing [again].”
“To be honest, at Fairholme such actions probably will continue as Fairholme grows and as we continue to act in the best interest of our shareholders. If I put my hat on as chairman of St. Joe, we desire for our shareholders to benefit in valuing the company."
On whether St. Joe did anything wrong to merit the SEC investigation:
"In terms of the SEC, it's not appropriate for me to comment on the interaction between St. Joe and the SEC. I can tell you also that the only new aspect to the latest disclosure is that the SEC stepped it up - in my opinion - to have the ability to talk with past and present executives of St. Joe as to what was previously discussed in filings of St. Joe."
"There is not a lot new here, except for I was named and Fairholme was named in the discussion, strictly in regards to our 13D position.”
"There have been other commentators that have had what I would call some type of dyslexia in reading the 8K. But if one reads the entire 8K, he would see that the 8K was put out for St. Joe's desire for shareholder benefit."
On why St. Joe would put out the filing before a holiday weekend:
"Easy. It was the soonest possible time we could do it, given the matter. I wanted to put it out as soon as possible rather than wait for today or tomorrow….We rushed as fast as we could, and that was the date."
"In all honesty, there was no consideration as to the timing of putting that out, except for as soon as possible…No one is going to miss it."
"It was my decision as the Chairman of St. Joe to put that 8K out, because we have a buyback program in place. We have a desire for the shareholders to benefit. And if the stock is going to be pushed down for whatever reason, by whatever articles that have been out there for the past three years, I want the company to preserve its ability to buy back shares on the open market…To preserve that ability, the public must know everything and the shareholders must know everything."
On whether he made this 8K disclosure by choice or was instructed to do so by lawyers:
"This was my choice as chairman of St. Joe, saying that I want our shareholders to know everything and I want to make sure we preserve our ability to repurchase shares in the open market."
"In fact, I hope I'm not upsetting the SEC by putting this out, because it is really at this point an internal matter. If you take a look at this type of event with most other companies, it's unusual for a mutual fund, but if you take a look of the hedge fund world, normally this type of event I do not believe is broadcast.”
"The main reason again is, is for whatever reason the price of St. Joe goes down, I want St. Joe to have the ability to buy back shares for the benefit of our shareholders."
On whether Berkowitz will initiate the share repurchase program if the stock opens down 3%:
"3% isn't a big number for us. St Joe's has been volatile. I am not going to tell anyone when, and if, we're going to do it. There's a very large short position on St. Joe. We will take the action when we see fit, and we're going to keep those cards very close to our chest. Now, you know the story."
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