Greenlight's Einhorn slams St. Joe again

NEW YORK Wed May 30, 2012 1:02pm EDT

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NEW YORK (Reuters) - Greenlight Capital's David Einhorn has heaped more criticism on Florida developer St. Joe Co (JOE.N), saying the business model is flawed and the company still needs to take further write-downs on its unsold beachfront real estate.

In the May 29 quarterly letter, Einhorn said St Joe Co "continues to carry its mostly vacant commercial real estate at inflated values" and its "effort to develop its best land through a historic boom" has been "a cumulative money loser."

The hedge fund has had a short position - a bet that the shares will decline in value - in the landowner for more than half a decade, and first discussed the bet against St Joe Coe at an investment idea conference in 2007.

The WaterSound, Florida-based company "also has a large investment in 'operating properties,' which are mostly amenities that support its various developments and do not generate adequate profits to support their capitalized carrying values," Einhorn said in the letter.

The Greenlight Capital funds were up 6.8 percent net of fees and expenses in the first quarter. The flagship fund has risen 4.8 percent through April.

Greenlight Capital had no comment.

St Joe shares fell about 5.7 percent to $15.97 in midday trading, but is up almost 9 percent for the year. St Joe Co did not return a request for a comment.

St Joe's largest stockholder is Bruce Berkowitz's Fairholme Capital Management, which owned a 27.68 percent stake in the developer as of May 18.

Berkowitz has been a notable and vocal bull on St. Joe in contrast to Einhorn's outspoken criticism. Last year, Fairholme's flagship fund was down 32 percent in part because of ill timed bets on St. Joe and financial stocks. But this year the flagship fund (FAIRX.O) has rebounded sharply, rising about 30 percent.

Einhorn also heaped more criticism on his most recent big short, Green Mountain Coffee Roasters Inc (GMCR.O), alongside St Joe Co, saying "neither company appears to have an audit committee worth complimenting."

Einhorn first discussed the hedge fund's short position in Green Mountain at the Value Investing Congress in New York last October, and the stock has nosedived almost 46 percent since the beginning of the year. Green Mountain shares fell 2.4 percent in midday trading to $25.18.

He singled out Green Mountain's new single-cup coffee machine, the VUE, for more criticism, saying its "launch results to date have been unimpressive."

(Reporting By Katya Wachtel; Editing by Gerald E. McCormick, Matthew Goldstein and Sofina Mirza-Reid)

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