Is JOE worth buying ???

Shelly, there's talk about Joe using modular homes at other Joe communities. There are physical and architectural limitations on modular construction. Joe has never been one to do something like this.This demonstrates how desperate they are and rightfully so. I think they are trying to hit a lower price point with a smaller home with generic designs. The airport is their only holy grail & could be the shot that would gradually turn things around. And then if things get really ugly, maybe rates will drop way down again, it is a bad situation but they have always pulled things out.......what do you think?

There are also physical and architectural limitation when building on postage stamp size lots. Remember that JOE paid almost nothing for its property, so they can still profit from selling lots for cheap. Now that might not sit well with shareholders because all they care about is the stock price moving up, which has more to do with public opinion rather than business fundamentals.

Smiling Joe, agreed, & it would not sit well either with other lot owners & homeowners who have paid much more for their lots & houses. There is almost no way out for Joe here, but self preservation is a strong motivator.

St. Joe as an entity has been around for almost 80 years !!! Every industry, as well as the economy in general, have their hiccups and catastrophes. It is all part of the natural ebb and flow called the business cycle. As sure as day follows nite, the real estate mkt and St. Joe the stock, will recover and prosper. The antidote is time and and further pain. The analogy is cancer. The patient needs surgery, chemo therapy, and recuperative time to return to health. I think the surgery has been performed and chemo is now being administered. If ones has a longer term perspective, the present condition offers a wonderful opty. Be prudent and use common sense. Don't gamble with the rent money. As the bible says, "THIS TOO SHALL PASS".

St. Joe as an entity has been around for almost 80 years !!! Every industry, as well as the economy in general, have their hiccups and catastrophes. It is all part of the natural ebb and flow called the business cycle. As sure as day follows nite, the real estate mkt and St. Joe the stock, will recover and prosper. The antidote is time and and further pain. The analogy is cancer. The patient needs surgery, chemo therapy, and recuperative time to return to health. I think the surgery has been performed and chemo is now being administered. If ones has a longer term perspective, the present condition offers a wonderful opty. Be prudent and use common sense. Don't gamble with the rent money. As the bible says, "THIS TOO SHALL PASS".

Agreed! I would imagine that any smart developer would understand the often predictable cycle or roller coaster ride (possibly more apt term) of real estate and housing- what goes up will come down and will go up again - eventually.

There are also physical and architectural limitation when building on postage stamp size lots. .

Small is the new big....

Agreed! I would imagine that any smart developer would understand the often predictable cycle or roller coaster ride (possibly more apt term) of real estate and housing- what goes up will come down and will go up again - eventually.

There are people out there who think that we'll see a repeat of the 2004-06 frenzied high-priced condo/home/lot grab & flip.....I'd bet the rent money that it's not going to happen again in my lifetime.



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Shelly, remember you are only 29 years old and your lifetime is going to go out into the next century. Please reconsider your betting of the rent money.

Shelly, remember you are only 29 years old and your lifetime is going to go out into the next century. Please reconsider your betting of the rent money.

29? Must be the Botox.


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I have a hard time seeing it at under 40

Said goofer

Well, JOE is at 39.42 now.

My bias is against shorting JOE is over now (actually has been over for a few dollars), and I agree that a long bias should be investigated slowly now.


Doubling Down?? Averaging Down?? Many a fortune were painfully thrown to the wind, during the last popping bubble (Tech/Internet Stocks in 2001 through 2002 end) by betting that the "good times" would come back quickly, rather than die painfully until everyone HATES the asset class.

When my neighbors and your neighbors start speaking of real estate investments, as poison, it'll be time to re-invest fully.

time will tell.

drsvelte

I am losing 58 cents on 500 shares. Yikes.....the sky is falling !!!

Goofer,

Here is Cramer's rendition of what an "Economic Meltdown" looks like:

[nomedia]http://www.youtube.com/watch?v=2eaMj1DPI6U[/nomedia]




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I, for one do not want to see the Fed lower the fed funds rate this week. It would send a signal that anyone who has screwed up because of their own greed or stupidity would be bailed out by the Fed. Individuals as wells as corporations need to be held responsible for their own actions. Only if the general economy and the broad financial system is breached by the credit crunch caused by subprime/junk bond financing and a domino effect hits the financial system, should the Fed act by lowering rates. But we are far from that. Banks have tightened up their lending requirements only recently. The fear caused by the bankruptcy of various subprime mortgage companies and the blow up of 2 Bear Stearns hedge funds that invested in subprime junk, were the events that caused the financial panic the last 10 days. On further reflection,those may be just the excuses for a much needed correction of 10% in the market. It was just 2 short weeks ago when everyone was celebrating Dow 14000 !! There will be further financial "thumpins" in the weeks ahead but I do not think the large money center banks and investment banks will fail. They will have big write downs but they will prevail. The poorly managed institutions such as subprime and junk financings investors {hedge funds} and providers of subprime credit (such as American Home) , will suffer most of the carnage and bankruptcies. I have said before that the only way to cure the cancer is radical surgery......that is what is happening now. The job of the astute investor is to identify the opportunities and buy the companies that have been tossed out because of the panic that has ensued. If the Bank of America, JP Morgan Chase, Citicorp or Goldman Sachs were to ever fail.....that would create a world-wide depression worse than 1929-1932. We are very far from that happening.

Goofer...

I think you are right about the possibility that there may soon be a buying opportunity in some stocks. But I don't think that includes JOE. This company is totally premised on using their land for development. There is a huge inventory overhang in Florida currently (and particularly Bay County where JOE has a lot of property), which will take some time to work off. Given tightened mortgage hurdles, higher rates, and the uncertainty surrounding the sub-prime, Alt, etc mortgages, this stock is not going anywhere soon.

I am not ragging you about JOE going under $40, but you said this was very unlikely. Look at the chart, there is distribution big time. You'd be a better buyer at 31.

The poorly managed institutions such as subprime and junk financings investors {hedge funds} and providers of subprime credit (such as American Home) , will suffer most of the carnage and bankruptcies. .

Almost none of American Home Mortgage loans was subprime...they were essentially adjustable rate and Alt-A mortgages (no doc/low doc for people with good credit scores who couldn't--or wouldn't--show documented income such as investulators, folks working on commission, Mafia, drug dealers and the like). My guess is that the Mafia and drug dealers are keeping up with their mortgage payments just fine.


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drsvelte

you may be right about JOE going to 31. trading at 37 now. Its trading down like a hot knife through butta !!!

Housing stocks in orbit. Did the FED's action of recognizing the credit issues create the bottom in housing, bank, and broker stocks ???? Comments ??

Housing stocks in orbit. Did the FED's action of recognizing the credit issues create the bottom in housing, bank, and broker stocks ???? Comments ??

Nah, nah, nah.


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ALL I am saying is that the issue of a credit crunch and foreclosures on middle income families has now caught the PUBLIC attention of the Federal Reserve. It is also now front and center in the POLITICAL arena and Presidential debates. I have no clue if this starts a sea change but it is certainly something to start thinking about. If FNM or congress comes to the rescue to ward off foreclosures.....doesn't that warrant something ??? My interest is in the stock market NOT buying Real Estate. May be the stock market will start to think about whether or not something may be afoot !!!

Goofer, have you been on Hillary's website, today? You may be on to something.

I would only go on her website if I wanted material and pictures to create a dart board !! But it just makes sense to me that as we are in the political season, an awful lot of "stuff" can happen in Washington that might focus on saving stupid people from their stupid mistakes.
When the Fed starts to acknowledge the problem publically and the leading presidential candidates make noises AND the speculators are talking of "things" going on behind the scence at Treasury regarding Hank Paulsen, Fannie Mae and the pols.......this all bears watching. We may be seeing the BEGINNING of the journey towards the end of the housing depression !!!

Nah, nah, nah.

You don't have AFLAC???

We may be seeing the BEGINNING of the journey towards the end of the housing depression !!!

"Housing depression?"

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"Housing depression?"

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Yes, the houses are sad that they were built and are now sitting empty. They yearn for the pitter patter of little feet and joyous celebration like their "friends" in other established neighborhoods have. Houses have feelings too. Maybe what the market needs is really medical help, not financial :leaving:

Goofer...

I think you are right about the possibility that there may soon be a buying opportunity in some stocks. But I don't think that includes JOE. This company is totally premised on using their land for development. There is a huge inventory overhang in Florida currently (and particularly Bay County where JOE has a lot of property), which will take some time to work off. Given tightened mortgage hurdles, higher rates, and the uncertainty surrounding the sub-prime, Alt, etc mortgages, this stock is not going anywhere soon.

I am not ragging you about JOE going under $40, but you said this was very unlikely. Look at the chart, there is distribution big time. You'd be a better buyer at 31.

Some food for thought on JOE from David Einhorn of Greenlight Capital (circa August 7, 2007)

David Einhorn, Greenlight Capital on St. Joes Corp.


The per acre analyses used by most St. Joe bulls exclude selling expenses and taxes. I believe that the equivalent gross value to the $9,000 an acre used in your analysis is the equivalent of $18,000 an acre, when taking expenses and taxes into account.

As it was, I did not quantify any amount of swampland at the Ira Sohn conference. I simply noted that some of the land is swampland. The weather is much worse than South Florida (just as hot in the summer and cooler in the winter), there are a lot of mosquitoes, there is not a lot to do, and the demographics are poor. I noted that I thought St. Joe overplayed the value of land within ten miles of the ocean and noted that I thought that vacationers would prefer to be "on the ocean." More than a mile is too far for many families to walk to the beach. Finally, I thought the airport development is the type of story often seen in promotional stocks designed to buy years of time to encourage the market to ignore current financial results. The current airport does not operate near capacity. Airports in Jacksonville an Ft. Myers did not spur a lot of development next to their airports and it is odd the St. Joe seems to believe that a lot of people will want to live near the airport, as if that is a residential attraction.

As I pointed out in my speech, since 2001, St. Joe has sold 268,000 acres at an average price of under $2,000 an acre. Since my speech, St. Joe announced another quarter where they sold over 30,000 additional acres at $1,500 an acre. As such, I don't see that it is very challenging to determine a value for most of St. Joe's land. Assuming they haven't sold the most salable stuff first, it appears that undeveloped land is worth on average sub $2,000 an acre before expenses.

I believe that about 680,000 of the remaining 739,000 acres are similarly undeveloped. Assuming St. Joe has no un-salable tracts of swampland and all the undeveloped land could be sold for $2,000 an acre, it would be worth $1.36 billion gross or about $700 million after selling expenses and taxes.

St Joe has just under 20,000 acres in development (some of which has already been sold). They have an additional 21,000 acres "In Pre-Development", meaning they have land use entitlements, but they are still evaluating the development or need additional permits. They have another 10,000 acres they are planning to entitle.

The developed projects have a book value of $800 million. St. Joe is not making good margins on selling developed property. Residential and commercial land sales have not covered its overhead in any quarter since 2005, when it was still in the homebuilding business. St. Joe is one of very few companies that has spent large amounts on residential development and has not taken any impairment in the current environment. To give St. Joe the benefit of the doubt, let's say the developments could be worth 1.5x book or $1.2 billion.

On that analysis St. Joe is worth $1.9 billion. Subtract $400 million of debt, leaves $1.5 billion of equity or $20 per share. I believe that adding in the time value of money would take this analysis down to the $15 number I used at the conference.

Regards,
de