Bull, Value And Bear

When examining the St. Joe Corporation, I say it essentially boils right down to who do you think: David Einhorn or Bruce Berkowitz? First as a background, Bruce Einhorn is 44 and has run his hedge finance Greenlight Capital since 1996. He started Greenlight with a million dollars from relatives and buddies and has parlayed that to a billion-dollar personal fortune. He is a both long and brief money manager. But his most well-known movements have been shorts against Allied Lehman and Capital Brothers.

He often publicizes his brief positions with jazzy powerpoint presentations in conferences. One of his current (or recent) pants is St. Joe Corp.On the far side of the wager is Bruce Berkowitz, who founded and handles the Fairholme finance since 1997. Berkowitz was called the Morningstar supervisor of the decade in 2009 2009. Fairholme fund returned about 12% over that 10 years.

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That beats the benchmark about by about 10% per season! I have followed him for the last half dozen years and he could be one of my esteemed investors. He is a very long time JOE buyer and lately he has put his reputation and money on the line by purchasing up 27% of JOE and becoming the chairman on its table.

This is actually a clash of the titans. It is not only enjoyable to watch but also educational. But I am betting on Berkowitz, here’s why. 2B with a tiny staff. It is just a landowner and all its value is linked with the land it is the owner of. JOE possesses about 570,000 acres of land in northwest Florida, which is right now filled with timber and some small residential communities. 10-20k. Farm land beliefs lately has been rising.

10 a talk about. I surmise that is my floor on the downside. Without doubt Berkowitz will not agree. Berkowitz has located himself in control of the business and he has the clout and resources to ensure JOE sustains itself in the close to term. So JOE is under no financial or shareholder pressure. Berkowitz can and is willing to wait it out. As a buyer, I don’t like to get bogged down in details when analyzing shares. I listen to JOE’s pros and cons.

But like religious beliefs, one can argue JOE’s benefits and cos for ten hours without changing anyone’s brain. Instead, I look for the views of the market may have misjudged. In JOE’s case it is approximately land. Two prominent investors have recommended investments in land. Michael Burry is buying up farmland. And Jeremy Grantham is recommending timber land.

Grantham states we will be in a severe world filled with source shortages. I am not as pessimistic as him, but I see a lot of truth in his discussion. JOE is the most liquid natural play on timber and land that I understand of. I mean, I don’t short stocks.