Einhorn is the famous Lehman short of 2008; he got a lot of flak from Clueless Charlie Gasparino for that. I seem to remember our own Lehman bear, Yves, getting snarled at by Charlie G somewhere along the line, too. But of course, Einhorn, via his vehicle Greenlight Capital, had it right; as did Yves (something that those decrying the “Yellow Journalism” of recent NC posts on “foreclosuregate” would do well to consider).
Well here, anyway, is Einhorn’s latest short: the Florida real estate developer, St Joe. Only capitalized at $2Bn (umm, a bit less since Einhorn’s short hit the newswires yesterday), so not quite in the Lehman league of portentousness, but still a nice example of the short seller’s nose for a dubious proposition.
St Joe seems to have made a lot of money selling off the good bits of its land bank (to other speculators, one imagines) during the Florida RE Boom; and rather less money (meaning, a red P&L) doing its own developments. The net result of all that, now we’re in the bust, is a fair cash pile, a decent burn rate, half a million acres of no-so-wonderful bits of Florida, and management stasis. So it appears to be the sort of boom-time survivor that will just gently implode when the money runs out. This is how an RE developer would look in the bust so St Joe is, if you like, a sign of the times.
There’s 5 Megs of presentation here if you like looking through a very carefully worked out short thesis (with some nice pictures and maps).
It is always striking how well-organized and data rich these short theses tend to be (if you are following John Hempton and his dippy Chinese travel agent, you know another example); I suppose if you are going to dissent from the near-mandatory happy talk, you had better be at your most rigorous.