The St. Joe Company: Mired In The Swamp

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About: The St. Joe Company (JOE), Includes: FAIRX
by: Kerrisdale Capital Management
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Kerrisdale Capital Management
Hedge fund manager, long/short equity, value, special situations
Summary

St. Joe’s land holdings are overhyped and worth a fraction of the company’s market valuation, under even the most aggressive development assumptions.

St. Joe’s largest shareholder, the Fairholme Fund, is subject to new SEC liquidity rules that should require it to meaningfully reduce its stake, raising risk of forced selling pressuring shares.

Optimism over St. Joe’s capital budget is misplaced. Despite years of delay, the Bay-Walton Sector Plan remains stalled and recurring revenue from commercial development is immaterial.

We are short shares of The St. Joe Company (NYSE:JOE), a Florida Panhandle developer with overhyped real estate holdings and a controlling shareholder who will soon be forced to liquidate part of his