Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: HB who wrote (4145)	5/22/1998 2:10:00 PM
From: Michael Burry	1 Recommendation Respond to of 78523

Re: SJP This is my notepad valuation that I did back when I was making my decision. Then I got a fax from Merrill Lynch that more or less confirmed it, though it a few different assumptions. I called the company and spoke with the "assistant treasurer" who helped me through some of the valuation of misc like the sugar lands. I spoke with people I know from and in Florida as well, and am very confident in my valuation - hence along with TBR and Deswell it is in my "power trio" of long term holds. I feel that you have a minimum net asset value in the 33/share range. Realize that James Clarke here is the expert on St. Joe. He sold his position because in his opinion the easy money has been made. I agree, but I feel that the downside is limited, and that right now at $30, the stock is a solid core buy for me. Anyone looking at SJP now should really look at FEC. In the opinion of many, FEC is more undervalued now. This may be the case, but I am interested in owning the majority holder. As FEC's stock increases, so does SJP's net asset value. The company told me it is "very happy" having control of FEC, and is not inclined to make another offer for FEC. SJP had offered just over 100/share, which to me would have been to good to be true, and it was rejected. St Joe's $500M cash + $1.4B Real Estate + $600M Timber + $420M Transports + $165 Sugar = 3.085B $500M cash and liquid investments Real Estate $1.4 Billion 100% Southwood Properties (resort, residential) - $750M -49,000 acres, including 5 miles of white sand beaches on the Gulf, @ 15,000/acre=$735M, will grow as developed - Acquisition of Arvida to quicken pace of community/residential development - Acquired Riverside Golf Management 54% Gran Central via Florida East Coast (commercial, industrial) - 1.3B X .54 = $700M - 59 buildings approaching 6.2 M SF of office space, avg annual rent $7/SF (minimum) - Entitlements for 14.2 M additional SF of office space, avg annual rent $7/SF (minimum) --> eventual $140-$150M/year in rental revenue or $60 M in earnings/year = worth about $1 billion in present value - 15,400 unentitled acres @ 15,000/acre = $231M - 1823 entitled acres including 8.8 acres in downtown Miami next to major government building and 78.6 acres in Orlando @ 30,000/acre = $55M - 418 developed acres @ 30,000/acre = $13M 54% FEC = $555 Million - not included, as this is undervalued - value per breakup of assets Timberlands $600 Million Acreage: 700,000 acres planted pine; 300,000 acres mixed = $600M Tonnage: 10.6 M tons standing pine; 5.9 M tons standing hardwood Production: 0.7M tons in 1996 Next 10 years: 1.6M tons softwood pulpwood; 0.9M tons softwood sawtimber starting 2008: 2.5 M tons softwood; 0.3M tons hardwood/year Leasing to state for hunting, etc: $1.3M revenues in 1997 = worth $26M present value *Transportation $420 Million 100% Aplachicola Northern Railroad (coal, wood) Operating Margin 15% Earns ~1M/year on 13M revs, so worth about $8M 54% of Florida East Coast's Transportation Unit, valued at 60% $500M minimum replacement cost 100% of International transit 28M sales 100% of Florida East Coast Railway 144M Sales Operating Margin 15% -12,000 acres of land along the East Coast @ 10,000/acre worth $120M Sugar $165M present value Sold lands for sugar to government for $133.5M $10M EBITDA/year through 2002-3 Salvage $1M

To: HB who wrote (4145)	5/22/1998 2:37:00 PM
From: Michael Burry	Read Replies (3) \| Respond to of 78523

Re: the India Fund It has performed better on a NAV value basis than the IGF over the last few years. Net asset value as of March 31 was 8.75. The stock's now around 8 1/8. I was looking for diversification into countries with low correlations with the US market. Thanks to the 15 year US bull, you end up in just a few crummy places, India being one of them. It's a country with serious problems. I happen to work with a lot of people from India, and I talked to them extensively. Basically, the new government is bad news and the banking system stinks. But they have excellent schools. development is at a breakneck pace. Many of my friends feel that the "next Silicon Valley" will be in one of certain cities in India due to the relatively cheap but highly educated tech workers there and the schools. The India Institue of Technology is one of the world's premier graduate-level technology schools. There is an exploding middle class according to the people I know. The middle class IMO is what creates stability. In sum, I looked at the India Fund, thought I was getting it at a discount, and figured it would be aÿgood long-term investment I first checked that I wasn't liable for any taxable capital gains distributions, which is one of the first things I look for in CEF's. I made one major mistake. I relied on trustnet.co.uk for my discount info, since I didn't have any way of getting current NAV info. DON'T do this. A lot of their data is in error. So in the high 8's I ended up paying NAV. A subscription at http:/www.icefi.com may be worth it if I'll be investing in CEF's, but I don't think I will too much due to the reasons Paul mentioned. Other countries I want to invest in - South Korea via the Korean Fund (my wife is Korean and I can get info through her family), and Japan. In Korea, people kill themselves if they don't get into the best schools. Like Japan, it is an incredibly proud country, but IMO even more so. That pride got them into this mess, but I can't imagine that they won't right themselves and come out much much stronger. The big risk in Korea is North Korea. If South Korea ends up having to bail out North Korea when North Korea falls, South Korea will hurt. Mike

To: HB who wrote (4145)	5/23/1998 8:05:00 AM
From: James Clarke	Respond to of 78523

On St. Joe, forget book value. The $32 asset value is as good an estimate as any. There's not a lot of downside here, but I feel as if it is the opportunity to buy a dollar bill for a dollar. Maybe in this market there are enough dollar bills trading at two or three dollars to make a case for SJP, but there's probably somewhere better to put the money for the time being. That said, in the last year and a half, whenever it looked like the fun was over for SJP holders, management pulled another rabbit out of its hat and the stock ran. But that was when the stock was well below NAV. JJC