JOE - ST. JOE CO

[RichardGibbons]

That is an excellent result--I think you should feel absolutely no regret about not making the max any time you are using options.

 

In fact, I think if people do make near the maximum when it comes to options, they're generally doing something stupid.  (Because it's hard to believe that it's a rational decision to buy $X quantity at one price, but also a rational decision to hold on to $10X quantity when the stock's skyrocketed over a very short time period.)

[mateo999]

Any color?  https://www.sec.gov/Archives/edgar/data/745308/000091957421002169/xslF345X03/ownership.xml

[BG2008]

as of today, I sold my last options and initiated a high cost basis #neversell small 1% tracking / regret minimization position in the common.

 

I started out risking 100  bps if JOE went to $0 (sold $25 puts, used proceeds to buy 3x $35 calls), then kept rolling profits to $35 calls, then $40 calls then $45 calls. as the position became uncomfortable large, I trimmed.

 

all in I added about 600-700 bps to my portfolio since October 2020 from JOE options, my peak cost at risk was never more than 200 bps (using house money fallacy, never more than 100 bps). Had I just held and never de-risked after the $45's I would have added about 1500 bps (maybe more) to the portfolio. I'm okay with that. this asset is very difficult to price. can't get everything right.

 

I am just going to blindly follow Pupil's swing trades from now on

[Saluki]

Any color?  https://www.sec.gov/Archives/edgar/data/745308/000091957421002169/xslF345X03/ownership.xml

 

I'm surprised he bought at 50 and not at 15.  Could be that he couldn't because he was in possession of material non-public info. Now that the earnings are out (2x what they made last year) maybe his blackout period, before and after an earnings release, is over and he's buying some for himself because he thinks the horse looks good in this race.  I haven't added at these prices, but I'm not selling for a while either.  I've been sitting on this while it traded sideways since 2019 and now that the plane is in the air, I'm not parachuting out.

[FCharlie]

Any color?  https://www.sec.gov/Archives/edgar/data/745308/000091957421002169/xslF345X03/ownership.xml

 

I'm surprised he bought at 50 and not at 15.  Could be that he couldn't because he was in possession of material non-public info. Now that the earnings are out (2x what they made last year) maybe his blackout period, before and after an earnings release, is over and he's buying some for himself because he thinks the horse looks good in this race.  I haven't added at these prices, but I'm not selling for a while either.  I've been sitting on this while it traded sideways since 2019 and now that the plane is in the air, I'm not parachuting out.

 

Those are sales, not purchases. About 1% of his position so not really a big deal, unless he continues selling of course... which would be very surprising and would contradict his recent positive commentary in his annual letter to shareholders.

[thepupil]

he started the year 65.5% JOE, 10% Fannie/Freddie prefs, 25% cash. JOE is up 17% this year and from what I can tell (I'm not sure if I'm looking at the right one) the prefs are down like 40%, so his % of in JOE is increasing, even more so if he continues to receive outflows (reducing cash). it's not entirely surprising that he is selling JOE. how much is too much? 80%? 90%? 100%?

 

I estimate hes about 80% JOE in FAIRX right now, assuming neutral inflows/outflows

 

EDIT: actually it looks like he's sold more shares than I thought, not sure how big

 

bloomberg shows that $1B of his $1.4B of disclosed holdings is JOE, so that would be 70%, but unsure of the accuracy.

[fareastwarriors]

Any color?  https://www.sec.gov/Archives/edgar/data/745308/000091957421002169/xslF345X03/ownership.xml

 

I'm surprised he bought at 50 and not at 15.  Could be that he couldn't because he was in possession of material non-public info. Now that the earnings are out (2x what they made last year) maybe his blackout period, before and after an earnings release, is over and he's buying some for himself because he thinks the horse looks good in this race.  I haven't added at these prices, but I'm not selling for a while either.  I've been sitting on this while it traded sideways since 2019 and now that the plane is in the air, I'm not parachuting out.

 

Those are sales, not purchases. About 1% of his position so not really a big deal, unless he continues selling of course... which would be very surprising and would contradict his recent positive commentary in his annual letter to shareholders.

 

Nice to see you back Charlie.

[Williams406]

More sales from Fairholme:

 

https://ir.joe.com/node/18631/html

 

 

[Gregmal]

https://www.businesswire.com/news/home/20210408005892/en/The-St.-Joe-Company-Tallahassee-Memorial-HealthCare-and-the-Florida-State-University-College-of-Medicine-Announce-Their-Intent-to-Develop-a-Health-Care-Campus-in-Panama-City-Beach-Florida

 

Meant to post this earlier. Joementum continues. 

Part of me is viewing this(the whole JOE boom) with skepticism of it basically being another instance of "this time its different"....but I am also seeing a lot of evidence that this time it is different. 

[thepupil]

this time is ABSOLUTELY different. This is not the JOE of the Rummell era. Fundamentally, you own all the incremental supply of land in one of the US's fastest growing counties. There's such a big difference between old JOE (speculative 2nd homes in "if you build it they will come" locations) to new JOE. 

New JOE is leasing up  apartment building quickly. New JOE is selling out lots immediately. New JOE attracts more tourists to its hospitality properties every year. 

I think it's  real, it's sustainable, and long term. 

But the stock isn't "cheap" either. it's very hard to value, but I think of the beauty of a land co as one where you can take non earning assets and convert them to earning assets in a low risk, unlevered, and sometimes tax deferred fashion (not for much of JOE's stuff though). JOE is still early and I'd like to pay a lower price relative to the existing estate of income producing assets. 

i want the stock to go down so i can buy more than my 1% pansy position, and think it will. SI is down to <2% of float, there haven't been any major institutoins buying and Fairholme is selling. But fundamentally it's doing very well. 

I think the speculative run from $30-->$55 is now over, and hope to purchase as a long term investment if she comes down into the L$30's. that's not too scientific, but I think of JOE as $10-$15 of scrub value + the florida development dream. I think they're making enough progress such that the floor keeps moving up, maybe the floor that was $10-$15 is now more like $15-$25. 

Edited April 9, 2021 by thepupil

[Williams406]

Well said, thepupil. It sounds like we are in a similar position--I have a small starter stake here and see enough to really want more at a lower price. To illustrate the position JOE has in Bay/Walton counties and PCB, specifically, look at what the Phillip Griffitts, Sr. Parkway is. To ease congestion around Pier Park North (JOE owned), Parkway was built through JOE land with city, county, state funds. Now JOE has all that road frontage and accessibility deeper in to its acreage off the coast. Second phase of parkway going in, $11 million cost footed by city/county/state.

https://www.newsherald.com/story/news/local/2021/03/30/panama-city-beach-opening-phase-2-phillip-griffitts-sr-parkway-summer/6979500002/

I imagine force vectors, one from the coast to inland (of course), and the other from Latitude Margaritaville Watersound development that is just starting (about 6-7 miles inland, I think), heading toward each other. Much of the acreage in between is JOE country. Minto is a good partner and does things well. It's nice to have land in the path of development, JOE is going to get that from two directions. This new health campus, grocery stores, etc. will follow population growth. Virtuous cycle stuff. JOE isn't going to run out of projects for a very long time and the JV cash flow will stack up over time. 

Look at the prices they are getting at Camp Creek: https://ir.joe.com/news-releases/news-release-details/st-joe-company-sells-all-23-homesites-first-offering-watersound. Crazy. Camp Creek isn't on the water.

 

 

[thepupil]

yep

2018: 63mm shares, $418mm real estate owned, $63mm hospitality and commercial revenue (recurring), $22mm profit

2019: 60mm shares, $505mm real estate owned, $83mm hospitality and commercial, $41mm profit

2020: 59mm shares, $630mm real estate owned, $83mm hospitality and commercial rev, $40mm profit

then you have all the (non-recurring) profits coming in from lot sales, which along with land contributions, add to the existing income producing estate. 

you can just "feel" the JOEmentum building. and there's a fixed supply of CryptJOEland. 

but it'd be more comfortable to own at much lower price.

 

 

 

 

 

[peridotcapital]

2 hours ago, thepupil said:

But the stock isn't "cheap" either. it's very hard to value, but I think of the beauty of a land co as one where you can take non earning assets and convert them to earning assets in a low risk, unlevered, and sometimes tax deferred fashion (not for much of JOE's stuff though). JOE is still early and I'd like to pay a lower price relative to the existing estate of income producing assets. 

I would like to own it and have been trying to come up with a simple-ish way to figure out what price is too high. I decided to calculate the cap rate on GAAP NOI over the last 5 years - not to use that as a valuation metric itself, as obviously it will be low since they only a fraction of the asset value is producing income currently - but rather as a way to try and figure if I would be getting the undeveloped land for a reasonable price. The results were surprising to me.

Between 2015 and 2017 JOE closed in the $18-$19 per share range and the implied TTM cap rate was in the low 3's. At year-end 2020, after the stock more than doubled in a year, the implied cap rate was nearly 3.5. At current prices, and based on a back of the envelope NOI estimate for 2021, I get something approaching 4.0. In other words, the stock is arguably cheaper today than it was a few years ago, even before considering how much further along development is.

If a mature real estate business is going to fetch somewhere in the 6 cap rate ballpark, and one can buy JOE today at a 4 with so much runway left, it seems like the undeveloped land is reasonably priced (2 full turns in cap rate). If the existing NOI was fetching a 1 or 2 cap then I would not be interested.

What do you all think about looking at it like this? I know it's rough and imprecise. I agree the stock could easily retreat, and I am not interested in building a big position in the mid 40's, but the near-term chart does seem to make it look more expensive than it is.

[thepupil]

i like your way of thinking. what's your back of the envelope 2021 NOI? (or range) 

[peridotcapital]

21 minutes ago, thepupil said:

i like your way of thinking. what's your back of the envelope 2021 NOI? (or range) 

I used $100M. And this metric does include one-time income (land sales) not just the recurring streams.

[Gregmal]

I think mainly the issue here is mental. As a RE investor, seeing movement like what this experienced is pretty difficult to internalize and there seems to still be an anchoring to "well this was $18 not long ago and basically for the past decade"....

At the same time, I think it may have been back around 2018 or so, I remember talking to folks, maybe even it was here, about how "wow JOE is actually looking really good. Fundamentally they are executing flawlessly"...So???What that worth? Plus the entire shift that took place around Sun Belt RE? Plus all the buybacks and now development? Is fit crazy to attribute a couple billion to those things? If so the current prices arent really all that crazy and like said above, perhaps even cheap.

I go with "gut feelings" and stuff like that all the time, but wouldnt this be the place where we need to look at fundamentals?

[thepupil]

Peridot: I thought you must have been including the non-recurring in there because I couldn't get to your numbers. I like your way of thinking about it though take ish w/ capitalizing the lot sales. But the hospitality revenue should explode if their construction pipeline is any indication. that could be where they're maybe getting a little too aggressive. 

Quote

As of December 31, 2020, the Company had under construction a 143-room Hilton Garden Inn hotel located near the Northwest Florida Beaches International Airport, a 75-room boutique inn and new The Clubs by JOE amenities at Watersound Camp Creek and a 131-room Homewood Suites hotel near the new Panama City Beach Sports Complex. In addition, the Company, with separate joint venture partners, has under construction a 255-room Embassy Suites hotel in the Pier Park area of Panama City Beach and an 85-room boutique hotel in Seagrove Beach. In December 2020, the Company announced the planned Hotel Indigo in Panama City’s downtown waterfront district. The Company intends to operate these new hotels. 

 

greg: the fundamentals are definitely good, but it's at 17x sales and 45x EBITDA.

obviously looking at just income statement for a land company is not the full picture, but it's not like the market is treating this as Panama City strip mall owner at a 10 cap. i basically want to buy this for a "can kind of see it eventually producing a good amount of cash relative to price paid" price, and sell it for "momentum/speculative/price" which is what I did when almost totally exiting in the mid $50's. 

with that aside, sort of in line with your thoughts on sports teams. I do think there's a "scarcity / trophy" element to this. there aren't many similar opportunities where you can buy a publicly traded county. i think it's perfectly reasonable for run of the mill billionaires and fund managers alike to just WANT to own a slice of JOE.  there's always a chance a big player just wants to own the whole west side of PCB and the whole inland of Walton County

you know like how Tom Petterfy bought 0.5mm far more rural acres for $700mm+ in 2015. the world has only gotten richer, Florida a more relatively attractive destination for capital. 

https://www.floridatrend.com/article/21395/floridas-new-land-baron

 

 

 

 

[peridotcapital]

Yeah, I think I was looking for a quantitative way to essentially block out the notion that $20 was fair - and thus $45 is materially overextended, like you said. So when at year-end 2019 I see the stock was $20 and the cap rate on 2019 NOI was 6.0 I am hoping that is enough evidence to force my brain into realizing that $20 15 months ago was simply wrong. Sure, I didn't buy it then so missed it, but it doesn't mean I shouldn't buy it now.

[Gregmal]

Yea Im trying to be balanced here because its an interesting mix of good fundamentals, possible euphoria, maybe a long term tailwind thats getting too much credit at the moment, or maybe a company thats paid its dues and is being rewarded...probably a combination of all that. I owned this so many times over the past decade as it was one of the better trading sardines. Buy at 16 or under, sell at 18-20, rinse repeat. Sold the last of my shares around $26 in the fall. Having had some time to reevaluate and also see things unfold, I have decided to cautiously revisit this as more of a real investment than just a trade as it was viewed in the past. It also helps/doesnt help depending upon how I look at it, that this is definitely something I am predisposed to liking. I rebought some in mid 40s and also have been selling puts.

I'd like to see it catch and hold a bid because it will in a way validate the story and the market's acceptance of it. If that happens then the super bull case can play out. But only if you have enough eyes and ears paying attention to it. The fear Id imagine for some is another pop and drop like what happened 15 years ago...I think thats off the table. Housing party IMO is just getting started. Second fear is that this was one of the momofad basket stocks that got pumped up on short term excitement and then just slowly deflates back to being viewed as it was prior maybe around $25 or so. Thats what I'm trying to be cautious of right now. 

I also think there should be some "good/great management" credit given to the valuation. Thats definitely a plus. 

[Gregmal]

PANAMA CITY BEACH, Fla.--(BUSINESS WIRE)--The St. Joe Company (NYSE: JOE) (the “Company”) today announced revenue for the first quarter of 2021 increased 122% to $41.3 million as compared to $18.6 million for the first quarter of 2020. The increase was broad-based with a 262% increase in real estate revenue, a 98% increase in hospitality revenue and a 30% increase in leasing revenue.

 

https://www.businesswire.com/news/home/20210428006021/en/The-St.-Joe-Company-Reports-First-Quarter-2021-Results-and-Declares-a-Quarterly-Dividend-Of-0.08

 

[Gregmal]

Looks pretty real and different this time to me. 

[thepupil]

agreed. 

[Saluki]

My only concerns for JOE was that they had a big development plan that included some debt.  If it worked, the flywheel starts and keeps going, but if it didn't it would go from a company with no debt doing a lot of buybacks to a company that would have to use cash to service debt instead of shrinking share count.  If it did work, I hoped that that stock would stay low so that they could keep doing buybacks and I could add more.  It looks like it's working (and getting noticed, which is reflected in the price), and if it came down again I would add more but I'm not going to chase it.  I'm just going to sit, relax and let JOE do it's thing, "when the train comes in, everybody rides."