St. Joe Company could be facing a lot of challenges as the report from Kerrisdale indicates. According to the release of Sahm Adrangi, the company is experiencing a lot of shortcomings that could reveal a future forced selling. Those who tune in will no doubt be interested in hearing about the situation concerning Fairholme Fund, the largest shareholder in St. Joe Company. Things are more likely to get worse because of the new SEC rules which Fairholme Fund must abide by.
The Fund as had poor stock choices for the last few years hence, the assets of Fairholme are declining by more than 90% from their peak. For this reason, the fund has to cut their position by approximately half. This will profoundly affect the share price of St. Joe. All these put St. Joe Company on the unstable situation even if everything else concerning the organization checked out.
Sahm Adrangi goes on to say in his report that the value of St. Joe Company is exaggerated to a level that cannot be believed. The company bought a deserted land near Panama City beach. Those plans were made ten years ago, and since then a little has been done concerning the projects. Nothing has materialized about the ideal place for businesses and retirees although shareholders are eagerly waiting.
The more significant problem according to Sahm Adrangi is the valuation absurdity. If the organization has the so stated $1 billion value, it should be selling the land as if it was getting out-dated. To get to such an amount, they would have been the largest real estate organization in the Panhandle market. The company could be selling more than any other player in the area if such was an actual case.
With the company’s lack of action so far, one can assume that nothing is going to happen. Sahm Adrangi states that the shareholders who are patiently waiting for something to happen, then they are likely to wait for a more extended period. There is no way St. Joe will deliver its promises with Fairholme disappearing from the table hence; there is no justification of its present price.