) -- Bruce Berkowitz, founder of
, has a message for those who are shorting his long-term investments: Thanks for putting it on sale.
In fact, in the case of
The St. Joe Company
, which is being vocally shorted by hedge-fund manager
, Berkowitz in interested in buying the entire company.
"We're long-term investors and we'd love to buy the entire company," Berkowitz told
in an interview Friday evening. "So, I really would like to create a situation where just everyone stays quiet and he can short to his heart's content. And we can ... buy to our heart's content, with the permission of the management."
In response to Einhorn's take-down of St. Joe at a conference on Wednesday, Berkowitz says: "If David wants to create an asset at a cheaper price for me to buy, thank you."
On Friday, Fairholme indicated in a regulatory filing that it had acquired another 135,600 shares of St. Joe. The Jacksonville, Fla.-based real-estate development company responded by rising 4.2% to $20.56 on heavy volume.
Berkowitz says Fairholme has a standstill agreement with St. Joe, and isn't allowed to acquire any more shares without management's permission. However, he'd like to open discussions with the firm -- which is now valued just shy of $2 billion -- and "other parties" for a potential buyout.
St. Joe has been the subject of much debate, following a 139-page presentation that Einhorn gave earlier in the week at the Value Investing Congress in New York. Einhorn characterized St. Joe as, essentially, a $2 billion company whose market value exceeds the deserted swampland it owns.
In slides showing the depressed values of Florida real estate and land, Einhorn said bluntly: "JOE's business has essentially stopped." As hedge fund managers are wont to do, Einhorn also hinted at potential problems with St. Joe's accounting for those lands in financial statements.
Einhorn had asked Berkowitz to come to the event for a one-on-one short vs. long debate about St. Joe. Berkowitz didn't respond directly to Einhorn, but his acquisition of additional stock was viewed as an implied response by some observers. Here's an edited transcript of his discussion with
about the issue:
TheStreet: Is your additional investment trying to tell David Einhorn that he doesn't know what he's doing in shorting the stock?
No, not at all.
I would say that, one, if something we like goes on sale, we buy more, as much as we can -- within our constraints. Two, if David wants to create an asset at a cheaper price for me to buy, thank you. And, three, he came out with a large presentation which pretty much said, "St. Joe is swampland." He's been saying that for a couple of years now, hasn't he? There's nothing new in that.
What's new in the presentation -- at least that I've not heard before -- is an insinuation that the accounting is bad. Now that's serious. Now you're saying that the management has gotten it wrong, the auditors have gotten it wrong, regulators have missed it. That's serious. That has to be addressed.
David Einhorn is not a client of mine, so I do not feel the need to educate him. I appreciate that he's been telling everyone for years that St. Joe is nothing but swampland. I took that comment to heart and I concluded differently. Only in time will this be resolved. Time will tell.
TheStreet: So it hasn't shaken your confidence in the company at all?
No, no. When someone starts with ad hominem attacks on me, it makes me smile because if that's where you're going now, then so be it. I don't deny free speech and I have no problem with someone's short. And I have no issue with David making money.
But, you know what? ... When you get into a situation where someone's trying to crush a company, well... Maybe he's right. But maybe he's wrong, so let's find out.
TheStreet: At the end of the day, actions will speak louder than words, huh?
At the end of the day, we'll see what happens. We're long-term investors. And, we'd love to buy the entire company.
So, I really would like to create a situation where just everyone stays quiet and he can short to his heart's content. And we can ... buy to our heart's content, with the permission of the management, because we have a standstill agreement which means we can't buy anymore without management's permission. So, that's why we filled out a Schedule-D, so we could start talking with management and with other parties about this issue.
I say: Let him short to his heart's content. And if he's so sure it's swampland he should keep going and we'll see what happens.
-- Written by Lauren Tara LaCapra in New York
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