Fairholme Capital's founder Bruce Berkowitz tells TheStreet that he's appreciative of hedge fund manager David Einhorn shorting The St. Joe Company, since he'd like to buy all of the real-estate development firm's shares.
MIAMI ( TheStreet) -- Bruce Berkowitz, founder of Fairholme Capital Management, 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 ( JOE), which is being vocally shorted by hedge-fund manager David Einhorn, Berkowitz in interested in buying the entire company. "We're long-term investors and we'd love to buy the entire company," Berkowitz told TheStreet 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 TheStreet 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?Berkowitz: 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.