12/1/2018

$97.20, +$1.93  for the week (as of midday Friday).  For the year, -8.87*.  Holding 4% cash.

Field Trip to Florida Panhandle

On Monday met with the CFO of St. Joe Company (JOE) at the headquarters at Watersound, FL, near Panama City Beach. On the trip toured all of JOE’s projects spread out over 177,000 acres and in numerous counties, from Tallahassee to west of Panama City Beach.  JOE’s damage from the hurricane was minimal, which is not to downplay the severe damage others suffered. We drove through the center of the hurricane damage. It’s like dozens twisters hit at once, on top of the 155 mph wind, there was a surge of flood water. It’s hard to describe unless you see it first hand. The damage was spread along 100 miles of the coast of NW FL, from water damage to complete destruction.

Mexico Beach, FL

Below (also Mexico Beach): the white house facing the beach, was built for 240 mph winds, i.e. in excess of a category 5 storm. Notice that the only other house in the area that survived is the one house right behind the well built house. That’s the definition of a good neighbor. CNN did a story on the owners of the “hurricane house”:  https://www.youtube.com/watch?v=eLjsDQyW5Y8

In the housing boom, in the mid 2000’s JOE got in way over their skis on real estate development. After the housing crisis, a few of the things they did look pretty silly today. I visited some of the properties back in 2010, 2012, and 2014.  By 2014, it looked like things had stabilized and the stock was quite a bit cheaper, but I saw no catalyst to own the stock at that time.  In the past several years, JOE has made many smart moves and the area has finally rebounded from the housing crisis. Employment is hitting new highs and the traffic at the airport has tripled over the last 8 years.  They have also cut the cost of running the company by 1/2, all while the number real estate projects in progress have ramped materially. JOE’s management are now large owners of their own shares and have been buying shares recently, another good sign.

Past results are no guarantee of future performance