The St. Joe showdown
Will Einhorn get the last laugh?
Last time I posted about the battle over St. Joe, Greenlight chief and poker titan David Einhorn was bathing in glory after he took the first round.
Value investing presentation – JOE hits the floor like a grandmother – lights out for Fairholme
Or so it seemed.
Fast forward four short months, a quick look at this chart says Berkowitz has him by the short and curlies.
But does he really?
Why bring out Berkowitz the activist then?
“I’d buy the whole company if I could… I want to send him a box of chocolates… This is the kind of advertising you just can’t buy. The company should hold a David Einhorn Memorial Investment Week.”
Was what he was saying a few months back, now let’s recap his later... troubles:
• SEC questions St. Joe’s accounting and valuations.
• Standstill agreement with Berkowitz lifted, he buys more shares and gets on the board. All was still well.
• Fights with the board and Morgan Stanley over strategy.
• Fights with the board over executive compensation.
• Resigns from the board prompting them to enact a poison pill.
• Proxy contest under way to change management and to “stop the bleeding”.
All is obviously not well in fair St. Joe, question now is will Berkowitz make it right?
Don't know about you monkeys, but I smell something fishy going on here. For someone as esteemed as he is, this whole mess somehow seems desperate, as if he’s looking for a way out now.
Wonder what he learned while he sat on the board.
Einhorn meanwhile still has his shorts on, patiently watching and waiting for it all to crumble.
Who’s side are you on?
Berkowitz owns so much of it he can't sell without cratering the price. I vote for Einhorn.
I was just talking about this today with an interviewee on the trading floor haha
This was a big short play in value at least 6 months before Einhorn's presentation. the dip afterwards would have been a good out but i'm sure the value guys still saw it going to 0 or close to, probably not taking the trades off.
Should be an interesting story here on out. I think it would be a hell of a headache to be on the board or mgmt now. Joe is just getting beat around and getting negative publicity however this swing currently.
STW how is the trading on it with all the short interest?
Judging from the positions movement over the last six months I would judge that this has more to do with pride rather than actual returns
I think at this point Einhorn has a fairly strong track record of sniffing out valuations irregularities and out-right fraud (Allied, Lehman). If you read "Fooling Some of the People Most of the Time," you get a pretty good sense of what this guy is looking for in his short positions. He's not a trader or even what I'd call an "analyst", he's really more of a historian. He looks for things that should have a negative impact on valuations but don't in thier SEC filings. Armed with his 10-K born hypothesis, he heads to the library to dig through the stacks.
It may be an instance of him not mentioning his losing bets much, but in the book he mostly says his biggest mistakes were not having the balls to hold until 0, even on trades where he covered after banking 30-40 dollars a share. I've never met the man but based on interviews he comes off as a legitimate truth seeker and not some egomaniac that refuses to be proven wrong.
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