In support of the short position taken by Kerrisdale with regards to St. Joe’s ambitious real estate plans, the investment company has issued a negative statement on the realtor. The report comes amid St. Joe Company’s surge in popularity that has seen the stock price quadruple. These developments have ignited optimism in the face of developers and led them into believing that the company might be heading in the right direction. Kerrisdale, however, casts serious doubt on St. Joe’s operations as well as the sustainability of the company’s business module.
The red flags
Kerrisdale goes ahead to highlight some serious investment pitfalls that every investor should carefully interrogate before committing their capital to the company. For instance, Kerrisdale points out to the fact that one of Quinstreet’s biggest investor, Fairholme Funds with a 30 percent stake in the company, might end up slicing this stake by half. The majority shareholder was recently forced to adhere to SEC liquidity rules thereby exposing the rest of St. Joe investors to the uncertainty of forced selling. Kerrisdale believes that the move might see the company’s stock price fall by more than 40 percent.
Additionally, QuinStreet has made little effort to prove its capability to enforce its master real estate plans. Channel checks by Kerrisdale point to the fact that the investor has made no significant efforts in enforcing their St. Joe land development proposals initiated close to a decade ago. Investors should, therefore, prepare to wait for returns.
The delays experienced with the development of the interior lands by the company cast a big shadow of doubt on the achievability of their now ambitious Panama City beach plans. Investors should note that a huge chunk of the Panama City Beach property lies in desolate and swampy areas. Its monetization is also based on an overly ambitious and its realization would only be feasible if the investment company sold more units every year for the next five decades in the district that were absorbed by the larger Panama market in 2017.
About Sahm Adrangi of Kerrisdale
Sahm Adrangi is the founder and Chief Investment Officer of Kerrisdale capital, a New York-based private investment firm. He is Yale University Graduate with a bachelor’s in economics. Before starting Kerrisdale, Sahm Adrangi worked as a manager at Longacre Fund Management as well as a bankruptcy restructuring specialist at Chanin Capital Partners.
Sahm Adrangi is known for being vocal about fraudulent companies. He uses his extensive knowledge to short them. However, just like he did with St Joe’s company, Sahm Adrangi does not just make up stories or claims of suspicious activities. Instead, he takes time to research widely before he can shortlist a company. He also publishes the information at Kerrisdale capital so the public can get access to it.