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In my original post about The St. Joe Company (NYSE: JOE) (see The long and short of The St. Joe Company I mentioned that Jon Heller of Cheap Stocks had been a past holder. Jon has clarified his position in a post on Cheap Stocks and provided some useful comments on where he sees the value:

For the record, while I believe that there is value in St. Joe’s assets, I have not owned the name since 2008. I originally purhased shares in the mid $20′s back in the early 2000′s, watched it run past $80, and finally had the position closed at around $40.

You may recall the back and forth between David Einhorn and I that appeared on this site nearly 3 years ago. David was short JOE, while I presented the bullish case. Einhorn had a $15 price target on the stock, and JOE bottomed at $16 and change in March of 2009, so David nailed it.

The reason that I don’t own St. Joe’s now is my skepticism about the company’s ability to convert it’s land holdings into cash, and how quickly it will be able to do so given the continuing Florida land depression. The oil spill, and how it will effect the Florida panhandle, is another concern.

With 577,000 acres, St. Joes currently trades at $3518 on the Enterprise Value/Acre metric that I typically calculate for companies with vast land holdings. While that may seem very cheap, it’s not that far below 2007 ($3956)and 2008 levels ($4016).

Bruce Berkowitz, whose firm Fairholme Capital Management owned nearly 29% of the company as of 3/31, laid out the bullish case for JOE at the recent Value Investing Congress West in Pasadena. While Berkowitz is way smarter than I’ll ever be, he used a lot of the same reasoning that I did when I was a shareholder, in order to present his case. I’ve just grown skeptical.

This may be the epitome of the value investor’s dilemna: a company with extremely valuable assets, but the assets need to be converted into cash in order for value to be realized. Can St. Joe’s pull it off?

I’d be an aggressive buyer of the stock at $2000 on an EV/acre basis, in order to provide a wider margin of safety. That would put the share price at about $13. That’s a long way from current levels, and it’s doubtful that we’ll get there.

Full Disclosure: I hold JOE. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.

Source: Cheap Stocks: Further Thoughts on JOE