StJoe (JOE) Shocks-takes charge, exits Florida bldg.

[goofer]

Shelly,
Just curious what you think of the action of the housing stocks, including JOE up 1.64 after the news. After each preannouncement these stocks have stabalized and trended higher. Isn't that saying something. There has been so much negative news and front cover magazine stories and negative tv stories on housing and the stocks don't go down and break to new lows. Everyone knows about shoddy building and lawsuits and all the rest. There are no further surprises unless we go into a deep recession. Do you think that is possible ? You, me, and everyone else have no special insight that the stock market has not already factored in. I have consistently said that reality has no bearing on stock prices (that has already been factored in). It is PERCEPTION that matters.

 

[Kurt]

According to Emerald Coast Magazine Aug/Sep 2006, the housing bubble talk is all hot air.

 

[goofer]

I suspect most buyers will find that what they thought were "promises" were only printed on their glossy brochures, touted during their sparkling soir?es, or chatted-up by their peppy sales reps. In reality, buyers will probably find the "promises" are oddly absent from the deep, dark reaches of the deed/sales contract--and further--that they signed away their rights to sue, opting instead for "arbitration" in the event of a dispute.

As this tale continues to unwind, stories from former employees about the inner workings of JOE will make for some interesting reading.

I can almost hear JOE's nemesis, Marc Lichtenfeld (theStreet.com), pounding away on keyboard this very minute .

I doubt your first comment is true since my lawyer reviewed the documents as I am sure other buyers did the same. This is a real estate transaction NOT an application for a brokerage account. Why do you consistently get pleasure out of other people's misfortune? I can only hope that it is what YOU consider to be part of your sense of humor. Sarcasm is always fun but getting pleasure from other people's difficulties isn't. You are far too intelligent to mean a lot of what you post.

 

[Cil]

That is what I was thinking. They are just going to focus on development and place making and even planning.

Yes. Agreed.
But with 100-odd fewer employees.
Perhaps a sound business decision in these times.

 

[bsmart]

What this says to me is St. Joe doesn't want to build spec houses, and will hire contractors to build multi-family and facilities, which they have done often already.

That is what I was thinking. They are just going to focus on development and place making and even planning.

 

[SHELLY]

Shelly,
Just curious what you think of the action of the housing stocks, including JOE up 1.64 after the news. After each preannouncement these stocks have stabalized and trended higher. Isn't that saying something. There has been so much negative news and front cover magazine stories and negative tv stories on housing and the stocks don't go down and break to new lows. Everyone knows about shoddy building and lawsuits and all the rest. There are no further surprises unless we go into a deep recession. Do you think that is possible ? You, me, and everyone else have no special insight that the stock market has not already factored in. I have consistently said that reality has no bearing on stock prices (that has already been factored in). It is PERCEPTION that matters.

I would view the reaction of the homebuilder stocks on bad news as suspicious at best and manipulative at worst. There are arguments on both sides of the homebuilders' trade--have HBs clearly hit bottom (and value funds are snapping up shares for long-term holding)? OR Is info being fed into the pipeline and buybacks being used to keep the prices up as the big fund guys and insiders have a chance to flush out their holdings (while hedge funds are viewing it as a chance to score some pocketmoney on the volatility)?

Face it, homebuilders are in the business to build homes...they build them and hopefully make profits to enrich the shareholders. Most of the news coming from the field is that order canx are in the double digits, entire sections of subdivisions are complete and empty with no buyers in sight, and they are taking losses on land option deals. IMO, this 'bad news' is going to drag on for some time and I'm just not seeing the need to rush in at this point...the RE market is still in the very early stages of unwinding. Much like a horse race, it will be very interesting to watch if you have placed a bet on the outcome--and there will be money made and lost. Me??? I don't want my fingerprints on this trainwreck.

My question to you is this: What are you hoping to get out of your bet on the homebuilders? Long-term value play, speculative, covered calls--what's your target & exit strategy? I will say this, when it comes down to a stand-off between builders and resellers, the builders will win out....but winter is coming and there don't seem to be many buyers out there...

 

[SHELLY]

Shelly, you are a complete stock hound. No wonder you kept mixing real estate comparisons with Wall Street. This is your true passion. See if you can get Joe down to $10/ share, and I'll buy.

JOE has been getting rid of its excess baggage over the past couple of quarters. It wouldn't surprise me to see JOE run itself into the ground to make it an attractive <read: cheap> target for a private equity buyout--that will probably happen in a about....in about....<shaking Magic 8-Ball> it says..."Ask Again Later"

 

[goofer]

Shelly....You have to go on another link ( message of the stock mkt) for my complete thought process. In an abbreviated note: 1) value relative to book 2) stocks act like they are washed out 3) Next Fed move is to lower rates 4) all the bad news is out or completely understood 5) the stk mkt is about PERCEPTION PERCEPTION PERCEPTION and not reality. Perception says all the negative news is in the stocks.
My target rate of return is 50% plus in 2-3 years at a minimum. I think covered calls is NOT the way to play these stocks.....you will be assigned very early on in the game and miss the upside. covered calls are more appropriate for stocks with high volatility that are at or near their highs. you sell at the moneys or slightly out of the moneys to give you some premium income and don't mind being assigned. covered calls should be used for some downside protection or to increase premium income......I am not generally a fan of covered calls. My exit strategy is to have a moving stop if I am lucky enough to have early gains. If I am wrong I will sell when the stocks go 3% below their lows in july/August. Those lows btw are my buy points as you will note in my previous posts. I want very tight stops on this housing play because this is speculative (its not like buying pg or jnj). If they break those lows of july/ August the stocks will go much lower, imo. As far as a trainwreck...that has already occurred. I completely disagree with you about big guys and info in the pipeline and hedge funds etc....The markets are too big and liquid for manipulation. That only works on illiquid stocks and that is not the case with housing stocks...they are very liquid. Besides there is a tremendous amount of very sophisticated monitoring that is done by regulators to identify unusual trading activity. It is not worth the risk to get nabbed trading on fancy info, the govt has deep pockets to prosecute and the penalties getting caught are extremely onerous. Also with the advent of Reg FD ( full disclosure) of several years ago there is very little info that is not public, in general. It is a crime for companies to release info selectively. They have to make a statement publicly, to keep the playing field level...that is why you see all the pre-releases. You give too much credit to Wall Street research and analysis.....in reality they are morons !!!! There are very few money managers that out perform indexing. You have to stay ahead of the curve and sometimes that means being early. BTW, I saw Cramer said he would buy housing stocks when the Fed lowers. I think by the time it becomes conv wisdom that Fed is going to lower, housing stocks will already have moved up off the lows by 25%. Sorry for the long winded post but I love the subject !!

 

[goofer]

Shelly,
All kidding aside, don't be surprised if there is consolidation in the building industry AND if a private equity fund does buy a homebuilder. Also don't forget the possibility of a leveraged buyout by the management of one of the companies. A good case could be made for buying you know what in the winter ! ;-)

 

[Beachbummette]

This doesn't sound very good for owners at WC or WS, of which I am one. How will this effect the beach club, golf club, and development of the rest of the property. JOE will definitely not have its eye on the ball as far as owners are concerned. They will now be preoccupied with layoffs and restructuring. The owners weekend for WS owners should be Very interesting. Stay tuned.

Do you all not remember that Seaside was originally in the home building business? It only lasted a few years as I think Mr. Davis got tired of wasting money on trying to learn the home building business.

Yes, I am a homeowner in Watersound (end user, always planned on keeping it) and think this could be a good thing. I hope they concentrate on the infrastructure now. It will all be turned over to the Homeowners Association eventually as has been the case in Rosemary Beach and other developments.