The St. Joe Company (NYSE:JOE) is a relatively small  real estate development company with a large amount of properties located in NorthWest Florida. The company would not be interesting, if not for a certain famous investor, who had a lot to say about the company in 2010. Additionally, another great investor had a totally different take on the company, which created a very intriguing situation.

At the Value Investing Congress in October 2010, hedge fund manager, David Einhorn, gave a lengthy presentation on JOE. Einhorn announced that he was short the company, and specifically questioned the real estate holdings on the company’s balance sheet. Einhorn calculated that the 577,000 acres of land which the company held, was worth less than $2,000 per acre.

The company’s Florida real estate was not even close to $745 million, as recorded on the company’s balance sheets. Einhorn noted that the company took necessary write-downs when it sold the land. He gave an example where some land stated at $74.5 million was written down only two days before a sale for a price of $11 million.

The stock at the time was trading at over $24 and fell 10% to around $20, by the end of the presentation. Einhorn thought the stock was worth $7-$10 a share.

Bruce Berkowitz, CEO of Fairholme Funds (MUTF:FAIRX), was at the time the largest holder of the company, owning 30% of shares outstanding. Berkowitz made some public remarks about the company but did not present but did not have much to say about the stock.

What is interesting, is that the company is now back at close to $20 a share. For the year the stock is up 35%.

Many factors are behind the rapid rise of the company. One big factor has been the overall increase in the stock market. Housing has shown signs of a possible real recovery, and many experts are now calling a bottom. Housing stocks have been among the best performers lately.

There have been many company specific changes as well. Berkowitz has taken a much more activist role in the company.

The company announced a change in strategy earlier this year.  This included a decrease in capex and increase Capex towards infrastructure, amenities and master planned community development. Besides ‘one time’ impairment losses, the company would have reported much higher earnings for fiscal year 2011 over 2010.

Berkowitz is surely smiling but Einhorn might be as well. Since the presentation the company reached a low of under $13 in November 2011. It is possible that Einhorn covered his short then. Additionally, Einhorn stated in the presentation that he originally shorted JOE at $60 a share. Even with the rapid price rise, Einhorn would still be sitting on a nice gain.

Who do you think is right?

(Disclosure: The author has no position in the company)