* Einhorn says St Joe business model is flawed in latest
* Greenlight has had short position in St Joe for more than
* Greenlight's flagship fund up 4.8 pct through April
By Katya Wachtel
NEW YORK, May 30 Greenlight Capital's David
Einhorn heaped more criticism on Florida developer St Joe Co
in his latest investor letter, saying the business model
is flawed and the company still needs to take further
write-downs on its portfolio of unsold beachfront real estate.
In the May 29 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 Co 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
declined to 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 has rebounded sharply, rising about 30
Einhorn also heaped more criticism on his most recent big
short, Green Mountain Coffee Roasters Inc, alongside St
Joe Co, saying "neither company appears to have an audit
committee worth complimenting."
Einhorn first discussed the hedge fund's bet against Green
Mountain at the Value Investing Congress in New York last
October, where he questioned the company's accounting practices
and ability to outperform competitors. 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.
Einhorn singled out Green Mountain's new single-cup coffee
machine, the VUE, in the investor letter, saying its "launch
results to date have been unimpressive."
During the first quarter, the New York-based hedge fund
opened to new and existing investors for the first time since
the end of 2008, according to the letter, and "a high percentage
of the capital... raised was invested in the dollar series of
the Greenlight Capital Gold funds."