, founder of the
), reduced his holding of St. Joe Co. (
), one of the largest landholders in Florida, by 2.44 percent,
GuruFocus Real Time Picks
. Berkowitz had also reduced his St. Joe position for the last
four consecutive quarters.
The shares sold were held in an account that was managed by the
Fairholme Fund at the direction of the client. A total of three
sales were made on May 7, 8 and 9, at prices of $18.06, $17.60
and $17.18, respectively.
Days before the transaction, on May 3, St. Joe announced its
first quarter results. The company reported a net loss of $0.9
million, compared to net income of $14.1 million for the first
quarter of 2011. Revenue declined to $30.5 million, compared to
$73.4 million the previous year, as the company had a one-time
timber deed transaction in the first quarter of 2011 that boosted
revenues by $54.5 million.
Berkowitz spoke about his St. Joe investment with Bloomberg on
February 13. "St. Joe is really about real estate. In recessions
real estate is worth very little. When it's in demand, it's worth
a lot more," he said.
A deeper-than-expected downturn in Florida real estate has
plagued the company, which has approximately 573,000 acres of
land primarily in Northwest, with approximately 70 percent within
15 miles of the coast of the Gulf of Mexico. Incorporated in
1936, St. Joe acquired most of the land decades ago at very low
cost. It has sought to increase the value of its assets by
enhancing it for better uses.
In 2011, St. Joe reassessed the carrying value of its real estate
which led to non-cash impairment charges of $377.3 million and a
full-year net loss of $330.3 million, compared to a net loss of
$35.9 million for 2010. In January 2012, the company adopted a
new real estate investment strategy to reduce capital outlays and
employ new risk-adjusted investment return criteria for
evaluating its properties and future investments in the
properties. Consequently it will spend less on infrastructure,
amenities and master-planned community development, as well as
reposition some of its assets to sell in order to preserve
capital, improve cash flow and reduce risk for the remainder of
the real estate downturn.
Berkowitz tried in 2011 to replace all of the members of St.
Joe's board with nominees from the
, which the company opposed, saying it was trying to take control
of the company without paying shareholders. A month later, in
February, St. Joe added four of Fairholme's candidates to its
board, including Bruce Berkowitz.
Berkowitz initiated his position in St. Joe in the fourth quarter
of 2007 when the share price was approximately $31. He has lost
approximately 38 percent on the investment so far, based on the
average price he paid for all of his shares.
The long-term investor still seemed satisfied with the St. Joe
investment regardless of macroeconomic conditions when he
reiterated some of the main points of his thesis on Bloomberg in
"I'm very proud of what's going on at St. Joe in that the
bleeding has stopped," he said. "The company is now structured
for whatever the future may be in real estate and will be ready
to take advantage of the tail winds that will eventually come.
So, it's a lot of land in the last sparse spot in Florida. St.
Joe is nothing more than the history of real estate development
in the United States."
David Einhorn has fared better so far with St. Joe. He shorted
the company in 2010, based on a thesis he explained in a
160-slide presentation at the Value Investor Congress that year.
GuruFocus Real Time Picks alerts you to the stock purchases and
sales that Gurus have made within the last two days. Follow your
favorite Gurus closely with GuruFocus' Premium Membership! If you
are not a Premium Member, we invite you for a 7-Day Free
Trial.About GuruFocus: GuruFocus.com tracks the stocks picks and
portfolio holdings of the world's best investors. This value
investing site offers stock screeners and valuation tools. And
publishes daily articles tracking the latest moves of the world's
best investors. GuruFocus also provides promising stock ideas in
3 monthly newsletters sent to