Article - JOE: A tale of 2 developments | Einhorn’s presentation
JOE: A tale of 2 developments | joe, tale, watersound - News - The News Herald
To respected Wall Street analyst David Einhorn, the value of St. Joe Co.’s land holdings is best illustrated as a tale of two developments. “Management loves to show investors WaterColor, but WaterColor is 90 percent developed and 80 percent sold,” said Einhorn, a hedge fund manager for Greenlight Capital Inc. who runs a $4.02 billion portfolio, during an Oct. 13 presentation to the Value Investing Congress.
But a few miles down scenic Walton County 30A resides another St. Joe Co. residential development with a different sales record. In the presentation, titled “Field of Schemes: If you build it, they won’t come,” Einhorn described the Towns of WaterSound — WaterSound Beach, WaterSound West Beach and WaterSound — as ghost towns and more representative of what’s being purchased when an investor buys St. Joe stock.
WaterSound only has interior lots left, many of which are on the north side of U.S. 98 where there is little demand, Einhorn wrote.
“The best stuff has sold,” Einhorn wrote. “Many developments are ghost towns and little value remains.”
Einhorn’s presentations have drawn a lot of attention — from investors, journalists, and now, the Securities and Exchange Commission (SEC).
01-27-2011, 09:30 AM #3
- Join Date
- Dec 2004
- Bluewater Bay, FL
To borrow a slogan from another mass developer in the area: 'Price: the ultimate amenity'.
The Breakfast Point project sounds soild- good price point for new single family housing close to the beach. Prices are in line with 'move-up' housing options for middle class families in the area. I suspect that the giant airport project will sell well if you include a good amount of single family in the $150-$250K range and condo/townhouse for lower income but aspirational service workers at sub-$150K.
I know JOE's hit those kinds of price points in some of their peninsula developments.
I suspect the Watersound North area would sell like hotcakes to the active professional/young retiree crowd if they were willing to hit a sub-$300K price point for single family. At that point, you really enlarge the size of the buyer pool.
JOE's got the cachet of building very nice developments for the affluent in the area. They can use that brand name to go after the asiprational middle class (a far, far larger potential buyer pool) and do well. In clothing terms, they've done the high fashion/coture, and it's time to move onto the ready to wear segment of the market. Lower margin, but the company is set up to do high volume and it could lead to real profitability.
Give people Hammock Bay prices without the inherent cheesiness of Hammock bay and a better location (which you have with Watersound North) and I think you have a winner.
01-27-2011, 10:02 AM #4
David Einhorn (Shelly?) is a short selling hedge fund, and is interested in spreading fear so he can profit, and its perfectly legal, and already worked in combination with the BP oil spill to take JOE to a valuation which was less than its timberland liquidation value. As far as the Northwest Florida News, go back to 2005, and recall that the majority of articles pointed too all the positives that were about to unfold, as opposed to the negatives now identified 6 years too late.
Because St Joe and the DEP planned WaterSound to be behind the primary dunes, WaterSound never sold true Gulf Front property anyway, so maybe I'm missing something in Einhorn's point when he talks about WaterSound having only interior lots remaining. One of those so called "interior" homes in WS, listed just under $3 million is under contract.
Granted, St Joe in no longer in the building business and selling only the lots, but all things are temporary. If the homes start moving again, they have the option of jumping back in. Now, it is cheaper for them to work with builders, giving the builders lot options, letting the builder foot the cost of building.
Another point: If all of Joe's projects were sold out on the levels of WaterColor, then what potential for future sales growth would JOE have?
Yesterday, I was showing property in WaterSound Beach. It is one of my favorite pieces of property in South Walton. Natural beauty is found in the primary dunes which are left mostly undisturbed, giving owners a chance to walk on elevated boardwalks which meander over the dunes, reconnecting people with nature, rather than removing nature to insert people.
WaterSound, formerly known as WaterSound North, is also a really cool place, though it is just an infant. With much time, WaterSound will be a community with many full time residents, and maybe some second home owners too. Plans are for commercial development to be added near the current entrance. Also, future plans are being seriously considered to create a new road from the new PCB airport to WaterSound, making it easier to get in and out of South Walton. Maybe someone can remind me of who owns all of that St Joe property through which the proposed road would be built. Oh, wait a minute, that's St Joe's property. Today, it probably be viewed as worthless interior land which by Einhorn. If the road is constructed, I wonder if the property on either side of the road would be left as planted pine trees? hmmm? I guess Einhorn has similar thoughts for the 50,000 acres of land surrounding the new PCB airport, also owned by St Joe. Nothing today, but what will that area become in twenty years? Will it become Bay County's primary source of revenue and jobs? If so, where will those employees live? Maybe in a St Joe property like the one behind Home Depot on 98 in PCB, which JOE is developing. Does Einhorn also think that Bay and Gulf Counties are the only entities which are courting industry in the areas of JOE's holdings? JOE has been and will continue to do whatever is necessary to create the need for rooftops.
All of the things which set JOE up for the future are really big, just spread over time in the future. Their holdings in Gulf Co along the "Forgotten Coast" are also primed for the future. Is the future growth already factored in to the current stock price? I have no idea, but I do heavily suspect that in 20 years from now, the St Joe properties will be shining in the Florida sun.
Last edited by Smiling JOe; 01-27-2011 at 10:25 AM.
01-27-2011, 10:11 AM #6
JOE can probably be better managed if taken private
01-27-2011, 10:43 AM #7
Einhorn is smart and arrogant. In late 2004, I witnessed him (Einhorn) chastize a junior analyst who's hard work had lead him to believe that certain publicly traded subprime mortgage lenders (Accreditted Home Lenders and New Century Financial) were ticking time bombs. Heresey he cried!!! The analysts work was spot on in fact, although a couple years early, as those subprime mortgage lenders started blowing up in 2006 on their way to swift bankruptcies.
Einhorn was right on JOE. It's just that now he is a wrong.
Since I'm protected (by Kurt) by the anonimity that this board provides, I can also share that I used to work directly with Meredith Whitney, since we're talking about arrogance. Meredith shares that trait with Einhorn, but no one that knows Meredith will accuse her of possessing Einhorn's other traits. If you ask me, I'd go a step further, because I had a front row seat to her airheadedness and later nauseating vanity. In 2007, I asked her what she thought about Negative Amortization loans being used increasingly by a couple of California lenders, including Golden West Financial, because I was personally shorting some small cap banks doing neg am loans. Her response: 1) what is a negative amortization loan? So ______, you're telling me there are banks that have made loans more risky than interest only, where borrowers can choose to make a payment that is less than even the monthly interest amount, at the option of the borrower? And the deficiency gets tacked onto the loan? And then the bank records that loan increase as even more positive "earnings?". Yes Meredith [you stupid ______]... if you spent less time setting up photo ops for your prestigious New Jersey prep school alumni yearbook photo shoot, and more time figuring out whats going on in your damn sector, i'd take you seriously, and stop introducing you as pro wrestler JBL's wife to my clients, to hold their interest.
I'll give her credit for sticking to her guns once she turned 180 degrees negative in the fall of 2007. She rode that horse where most would have declared victory too early, including myself for sure. Then, arrogance got the best of her, and continues to do so to this day. She has continued to be negative as many bank stocks that she covered have tripled, quadrupled or worse.
01-28-2011, 11:44 AM #8
- Join Date
- Mar 2005
- in perpetual motion
Hm. I stopped reading the presentation when I noted the comparison shots of Nantucket/HH/Napa vs. Joe property. They deliberately de-saturated the color out of the Joe shots-- an old graphic trick that works to create a negative emotion. Plus they didn't show any of the beautiful Joe shots, such as, say, Watersound dunes and boardwalk for apples-to-apples comparison. Blatently stacking the deck like that made the presentation lose credibility, so I exited out.To dance beneath the diamond sky with one hand waving free,
Silhouetted by the sea... - B. Dylan
01-28-2011, 12:00 PM #9
I think Joe just gave over daily ops to the homeowner's association at Watersound.
Yes it looks like hyperbole. I guess these days the way to win on the market is to manipulate people and stock. Kind of like people do on here at times.
Still, the real difference between Port St. Joe (which I adore) and a place like Nantucket or Hilton Head are striking. Not just the appearance but when the paper mill shut down the poor got poorer.
I just left WaterSound West Beach and there are a lot of spec homes going up. Yes - SPEC HOMES! Also many in phase 4 in WaterColor. A builder friend said he hasn't seen spec homes in 5 years.
01-28-2011, 08:22 PM #11
By ASH in forum Real EstateReplies: 1Last Post: 01-18-2011, 12:44 PM