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: TAPDOG who wrote (6149)	3/1/1999 11:26:00 PM
From: Wright Sullivan	Read Replies (2) \| Respond to of 78476

I'm glad the JOE articles were helpful. I spent the better part of a recent weekend tracking down every obscure iota I could find on JOE, especially from independent sources. I have a binder full, but those 4 links lead to most of the important information. >>what has caused the stock to lose half its value in the last year? JOE's CEO, Peter Rummell, came aboard from Disney in early 1997. The stock rose through 1997 as investors decided that a sleeping giant had awakened. While Rummell has made many positive moves toward unlocking the value of JOE's assets, a few percieved missteps have caused negative reactions. These include JOE's tiny investment in an "event-based entertainment company" (Entros), and JOE's joint venture with the NFL for NFL-themed restaurants. Entros remains tiny and insignificant, and the NFL venture was quickly discarded last year. But these are still seen as a black eye on management, as a loss of focus from the core real estate mission. JOE's majority owner, the Alfred DuPont Testamentary Trust, did a secondary offering at $34 about a year ago, and this generated a lot of interest. However, once the secondary was sold and there was no new catalyst, JOE began to drop (along with many REIT's). It has stayed down most of this year. James Clarke called the rise of JOE on this board 1.5 years ago, and also called the top a bit later. Quite a call, and not just luck--his logic was impeccable. (See his JOE posts 6-18 months ago on this thread--they're worth reading). He has commented recently on this thread about JOE's current lack of a catalyst. I don't see these announcements of land sales as a huge catalyst. I think JOE will soon start a long slow climb upward, and there probably won't be a single catalyst. But when I look five or ten years out, I can't see a picture where JOE's value isn't tremendously higher than it is now. Paul's post mentions that "CDX is better managed" than JOE. I do not take issue with Paul's judgement, but when I look at Peter Rummell's background (chairman of Disney Imagineering, Arvida before that) and his team of Florida real estate veterans, I'm not sure what more I could ask for. The one thing I gleaned from those articles is that JOE is moving much faster than people realize. The investment community consensus seems to be that it will take 7-10 years for JOE's residential developments to bear serious fruit, due to Florida's rigorous DRI (development of regional impact) approval process. My impression is that JOE's developments are generally welcomed by the local communities and are having very little difficulty with approvals, and that we can expect benefits in the 2-4 year time frame. I have loads more thoughts and info on JOE but don't want to go on ad nauseum here. But a careful reading of the newspaper articles indicates to me that JOE is a company with huge ambitions, to remake the Florida panhandle (a.k.a. "the Redneck Riviera"). I don't think the investment community realizes just how encompassing those plans are. My take is that they'll do it methodically and a whole lot of money will be made in the process. But certainly a strong case to the contrary can also be made. As to a basic valuation of JOE, Michael Burry's valuations from a year or so back are still pretty much valid, except for a few minor changes. I'm not confident making the call on whether JOE's assets are worth exactly $30 or $40 per share, but it's in that range. Regarding the value of the timberlands being sold, $900-$1000/acre is a good ballpark figure. So we're looking at another $700 to $800 million in cash. Wow. And they get to keep the 30 miles of beachfront, and all the other developable land... Okay, James is right about the taxes knocking that number down significantly, so maybe they only get $450-$500 million for the undevelopable land. I'm going to update the valuation but won't get to it for a few days. Will post it then. Sorry to run so long on this. -Wright