While many people have been optimistic about the capital budget of St. Joe’s land development, Sahm Adrangi thinks their optimism has been completely misplaced and the company is being highly overvalued. He believes that the land holdings that St. Joe has not monetized yet do not have any real potential to be the communities that they are claiming they will be. While many of their previous developments were located on highly desired beachfront property, their Bay-Walton sector is located in the middle of swampland and in the middle of nowhere. While Florida may be known for all of the things there are to do there, the area that they are working with isn’t conveniently located to much of anything. It is all located in the central region of Florida and it is also the remainder of most of the land they have not monetized yet.
While investors were initially excited about the plans that were first talked about over a decade earlier, that enthusiasm is starting to fizzle out as plans keep getting pushed back further and further. While the company may be valued at right around $1 billion, Sahm Adrangi thinks that is should only be about 60% of that at most and that the market will soon adjust to this fact. Certain factors will help this come to fruition much faster like the recently imposed Securities and Exchange Commission regulations that will affect their main investor. Once these new liquidity rules are enforced, their largest investor will be forced to sell off about half of their shares in St. Joe in order to remain compliant.
Sahm Adrangi attended Yale University from ’99 to ’03 and majored in economics. He worked in the financial industry for approximately 6 years before founding his own investment company, Kerrisdale Capital Management. As their Chief Investment Officer and founder, he makes long-term investments as well as short-selling. Before starting Kerrisdale, Sahm Adrangi worked at Longacre Fund Management with a $2 billion distressed debt fund as an analyst.