This story for anyone following it never seems to stop. David Einhorn in a famous speech at the Value Investing Congress in New York last year stated that he was short a company called St. Joe, which is a small Real Estate company based in Florida-click here.

For anyone unfamiliar with David Einhorn, he is the of Greenlight Capital, a Value oriented long/short hedge fund. Einhorn’s fund has prodcued 30% gross returns per annum over the past 14 years. Einhorn wrote an excellent book titled Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story, detailing an earlier short of a company named Allied Capital, and Lehman Brothers before their collapse. I will be doing a formal book review on the topic shortly.

Bruce Berkowitz is the Portfolio Manager of Fairholme Fund with ~20 billion under management. Berkowitz is a value oriented investor, who was named the fund manager of the decade by morningstar. His fund has produced returns of 11.68% per annum over the past decade versus a nearly flat S&P500 return. Bruce Berkowitz owns ~30% of St. Joe and is now increasing his control over the company by attempting to become chairman.

I reported this yesterday in an article on, below is a brief excerpt:

Just when you think the story will finally get old, there is always a new development. As most readers know Bruce Berkowitz has found himself in a battle against David Einhorn over the small Florida real estate development company known as St. Joe Company, and it appears that the battle just keeps getting more exciting. As the company’s largest investor, Berkowitz has both the pleasure and the trouble of defending St. Joe to the investment world and David Einhorn as being the bear voice.

To add even more to the story,Fortune reported that Berkowitz will be changing St. Joe’s board; including an attempt to become Chariman. Berkowitz has since confirmed this statement, and it will definitely be an interesting issue to keep our eyes on in the coming days and weeks.

As the article states, these anticipated changes really do bring about a full series of questions for not only the future of the current board, but for the future of the entire company. It’s no secret that St Joe’s has been in trouble (reporting major losses for the last three years), but while it does possess assets in the form of almost 600 million acres of land, the current economy and housing market doesn’t exactly bring justice when looking at the company. The rest or the article can be found on

There have been further developments in the fight between the two giants. David Barse of  Third Avenue Management, one of the best value fund families was on CNBC yesterday describing why he is long St. Joe. The video is below:

In addition, Berkowitz has released his own 56 page document supporting St. Joe to counter David Einhorn’s 139 page document explaining why he is short the stock. Most people do not realize that David Einhorn has been short Joe since the stock was $60 as I reported . Berkowitz’s document is below and I also posted Einhorn’s presentation, despite it being several months old it is still relevant.

St. Joe

Field of Schemes: If You Build It, They Won’t Come: David Einhorn

Finally there was a big announcement from St. Joe after I wrote the article on GuruFocus yesterday. The company is hiring Morgan Stanley to evaluate options for the company. This could be a good or bad sign. Warren Buffett tried without success to take a more activist role in USG.  See chart below:

WaterSound, FL – February 8, 2011 – The St. Joe Company (NYSE:JOE) today announced that its Board of Directors has unanimously decided to explore financial and strategic alternatives to enhance shareholder value.

The Board intends to consider the full range of available options including a revised business plan, operating partnerships, joint ventures, strategic alliances, asset sales, strategic acquisitions and a merger or sale of the Company. The Board of Directors has retained Morgan Stanley & Co. Incorporated to assist it in the evaluation of these alternatives. The Company noted that there can be no assurance that the exploration of strategic alternatives will result in any transaction.

Britt Greene, St. Joe’s President and CEO, said, “We have engaged Morgan Stanley to undertake a comprehensive and thorough review of all available alternatives, and our Board and management are committed to taking the appropriate and necessary actions to enhance value for St. Joe shareholders.”

Full release here-St. Joe Press Release

I do not know what will happen but this is an exciting story to follow. Any important updates will be posted on Value Walk.

Disclosure: No positions in any companies or funds mentioned