Value Investing Congress: An Overview Of David Einhorn (JOE)

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David Einhorn Greenlight Capital is short The St. Joe Company
JOE
, as he believes the company is a scheme. JOE's management used to talk about how much land was a mile from beach, now it talks about how the land is 40 miles from airport. Bulls of JOE are saying Luecadia
LUK
bought land at Panama City, but it isn't comparable. Einhorn said it will take many years to sell its remaining 31,000 units, as it only sold 1,600 units recently. JOE's business has essentially stopped since the real estate bubble. It's stopped selling homes in 2010. It only sold 22 homes for $2 million in first half of this year. He says that the real estate business has $5 million in revenues, and should have a $32 million loss. The company stopped spending money on lands. St. Joe's has only taken modest write downs, despite making huge investments prior to the housing bubble. There is a lot of untouched land that St. Joe's counts as projects and development, which should not be. Einhorn went on to discuss specific lots, of St. Joe's. He believes specific impairments should be taken across the board. One example he mentioned is Rivertown, which is a particular region which is a prime example of JOE's lying to investors. The average cost in Rivertown is $90,000, and the average price sold is $72,000., The company has sold 2 lots recently for $31,250. St. Joe's has a carrying value of lots at $400,000, and it would be lucky to sell properties at $31,250. Einhorn believes there should be an impairment taken on these. Windmark Phase II is mostly unbuilt, and is another example of St. Joe's fraudulent claims. Einhorn believes it to be worth $17.8 million, while St. Joes carries it as a value of $165 million in Windmark. It can be found in the 10-k. St. Joe's capitalization policy would cause a required write-down if market value is below book value. Victoria Park had a carrying value of $78 million, and it sold all the rest of the undeveloped land, plus a golf course and a note receivable for $7.4 million. St. Joe's only seems to take a write-down when it exits an investment. Einhorn concludes by saying best lots sold, biz stopped after real estate boom ended. many developments are ghost towns, and little value remains. Einhorn believes the St. Joe's airport has little value. Einhorn believes that JOE needs to take massive impairments across the board. He suggest the company return to its roots as a rural land developer. He says the rural land is worth $850-950 million, or $7-10 share. There is nominal value in the company's other properties. Einhorn concluded saying that JOE is stuck, as it can't sell the company because it's grossly overvalued. Einhorn says in 10-15 years if company operates as it has been, it will be worth 0.
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Posted In: Hedge FundsMovers & ShakersDavid EinhornFinancialsMulti-Sector HoldingsReal Estate Management & DevelopmentValue Investing Congress
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