The St. Joe Company (NYSE: JOE) is currently a large holding of the Management Access Covestor model by Douglas Estadt (as of 7/5).
For more than a year, the company has been at the center of a public dispute between mutual fund manager Bruce Berkowitz of the Fairholme Funds and hedge fund manager David Einhorn of Green Light Capital. Here’s some background information about JOE:
St. Joe is the largest private landowner in Northwest Florida, with about 576,000 acres, including more than 300,000 acres surrounding the new Northwest Florida Beaches International Airport.
The company’s roots date to the 1920s when Alfred I. duPont, black sheep of the Delaware chemical family, and his brother-in-law Ed Ball bought up Panhandle land. A new chemical process had made it feasible to use low-grade southern slash pine to make pulpwood, and enormous quantities of timber were needed. With the acreage assembled, Ball founded St. Joe Paper in 1936 — after duPont’s death. …
[Berkowitz] has been fighting to turn around the money-losing company’s finances, and publicly struggled — and succeeded — in maneuvering the ouster of the storied company’s top executives and the majority of its board. Earlier this year, he took the board’s helm as chairman and brought in a roster of new directors.
Berkowitz believes the company is significantly undervalued, and has amassed a nearly 30% position in the company. Einhorn used last year’s Ira Sohn Conference to show why he believes it is overvalued.
The U.S. Securities and Exchange Commission has signaled it might be siding with Einhorn, as it has recently launched an investigation into the company and Berkowitz. According to The Miami Herald:
The St. Joe Co. is under formal investigation by the Securities and Exchange Commission, the publicly traded WaterSound, Fla.-based real estate development company has disclosed in a filing.
The order of investigation covers various matters, dating to the beginning of 2007, according to the filing, including antifraud provisions of federal securities laws, as they apply to the company, its past and present officers, directors, employees, partners, subsidiaries and affiliates. It also covers the compliance of reporting obligations by those who currently and in the past have directly or indirectly owned more than 5 percent of St. Joe’s stock, including Fairholme Funds, Fairholme Capital Management and St. Joe’s chairman Bruce R. Berkowitz.
In addition, the investigation covers internal controls, books and records, communications with auditors and financial reports, St. Joe said in its filing, made Friday.
Berkowitz recently gave the following candid interview on Bloomberg:
Sources:
“SEC’s investigation of St. Joe Co. now ‘formal’” The Miami Herald. 7/5. http://www.miamiherald.com/2011/07/05/2300470/sec-looking-into-st-joe-co.html
“`Not a Lot New’ on St. Joe Probe, Berkowitz Says” Bloomberg, 7/5. https://www.bloomberg.com/video/71900634/
