St. Joe Co.’s shares plunged after David Einhorn, who profited from bets against Lehman Brothers Holdings Inc. in 2008, said the Florida real-estate firm must take “substantial” asset-impairment charges and that further building will drive the stock price to zero.
“The best properties have been sold, many lots were sold to speculators during the boom, and when the boom ended, business essentially stopped,” Einhorn, who runs hedge-fund operator Greenlight Capital Inc., said today at the Value Investing Congress in New York. “There’s little evidence of how Joe spent so much money on these developments. Many developments are ghost towns and little value remains.”
St. Joe, based in Jacksonville, Florida, retreated 10 percent, the most intraday since April 30, to $22.03 at 12:58 p.m. in New York. The shares declined 15 percent this year through yesterday.
David Childers, St. Joe’s vice president for finance, didn’t immediately respond to a request for comment.
The company is accounting for untouched land as developed, Einhorn said. Also, St. Joe’s RiverTown community is a “moonscape,” and WaterSound and WaterColor are empty, he said.
“Joe’s highest and best use is to return to a rural land company,” he said. “Management should sell the company, but it can’t because the stock price is too high.”
While Einhorn didn’t say how much he’s betting against St. Joe, he said he will lose a lot of money should his thesis prove wrong.
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