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Kerrisdale Short Report Says St. Joe's Real Estate Plan 'Pure Fantasy'

Kerrisdale Short Report Says St. Joe's Real Estate Plan 'Pure Fantasy'

St. Joe Co (NYSE: JOE) plunged as much as 5 percent Tuesday after Kerrisdale Capital issued a short report on the firm’s “overhyped real estate holdings.”

“The bull thesis for St. Joe rests on the company’s ability to transform remote land, which no one can feasibly develop over an investment lifetime, into a world-class destination for retirees and businesses,” Kerrisdale wrote, calling St. Joe’s real estate plan “pure fantasy.” “There has been little progress on this plan for over 15 years.”

By Kerrisdale’s assertion, St. Joe has sold the most valuable parts of its initial 1 million Florida acres. Its remaining 177,000 acres lie inland in swampy, remote regions, which, despite a decade of promises, have yet to be developed.

The firm was found to have minimal cash flow from existing operations and to secure more in junk bond interest than in real estate development income, the short report said. 

St. Joe did not respond to a request for comment from Benzinga. 

Kerrisdale asserted that the Fairholme Fund, a controlling shareholder, will soon be forced to liquidate 10 million shares to comply with new Securities and Exchange Commission regulations — a circumstance that will certainly hurt the stock.

“St. Joe is valued as if a new metropolis will soon emerge from rural forest and swamp,” according to Kerrisdale. “As liquidity risks mount for its largest shareholder, investors will see values sink back into mud.”

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