Sahm Adrangi Talks the Decline of St. Joe Company

In 2011, Sahm Adrangi garnered significant recognition for his role in shorting several prominent Chinese businesses, while simultaneously exposing them for fraudulent practices. Since that time, Mr. Adrangi’s name has been commonly associated with short-selling, and recently, his company, Kerrisdale Capital, released a report signifying their intentions regarding the Florida-based land development business, St. Joe Company. St. Joe Company was recently valued at $1 billion, with many excitement accruing concerning their plan to further commercialize the Panama Beach area, creating a retirement destination. Despite these prospects, Sahm Adrangi estimates that this over-hyped and over-valued company is, in fact, only worth about 60 percent of the publicized valuation. The gross misevaluation is coupled with a number of other concerns, including that status of their largest shareholder, as well as stagnation regarding the commercial development of the Panama Beach area. While the Panama Beach area has garnered significant hype in recent times, in all actuality, much of St. Joe Company’s real estate that has yet to be commercialized, is located in remote, and often, swampy areas. This significantly reduces the appeal of St. Joe Company for the foreseeable future.

According to Sahm Adrangi, St. Joe Company is also experiencing a number of issues with their largest shareholder, Fairholme Fund. Today, Fairholme Fund holds 22.7 million shares of St. Joe Company, but with the arrival of new regulations presented by the Securities and Exchange Commission, they could be forced to liquidate 10 million shares by the end of the year. In Sahm Adrangi’s estimation, this is a virtual impossibility, particularly considering that there are not enough trading days left in the year to allow this without negatively affecting the price of each share. Bruce Berkowitz, the chairman of the board at St. Joe Company, as well as the fund manager for Fairholme Fund, presents another problem, as his dual role in each company presents a conflict of interest. If he and the two other dual role board members decide to step down in order to forgo any sanctions, the stock price could face a sharp decline.
http://www.worth.com/qa-short-seller-sahm-adrangi/

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