St. Joe Company, was recently given a valuation of $1 billion – a figure that, according to Sahm Adrangi of Kerrisdale Capital, is off by a considerable margin. Recently, Mr. Adrangi, Chief Investment Officer of Kerrisdale Capital, published a report concerning the valuation – explaining its flaws as well as their position to short the company. Over the course of his career, Sahm Adrangi has consistently made waves by exposing overvalued or fraudulent companies, and in many cases, his research has proved to be correct. According to Mr. Adrangi, St. Joe Company is both, “over-valued and over-hyped,” and Kerrisdale Capital’s research suggests that it is actually worth 40 percent less than advertised.
Sahm Adrangi supported his argument with a variety of tangible factors, including the state of its sub-par real estate assets. Many of these land resources are located in remote areas, and also have swamp-like conditions, making them areas that are unlikely to be developed in the near future. Recently, St. Joe Company has seen a substantial surge, due mostly because of their plan to create a destination and retirement community near Panama City Beach. Although there has been a level of new excitement surrounding the proposed product, ten years have passed since any real development has taken place, and no permits have been filed for its continuation. Competition has also created a market that has become somewhat oversaturated, due to an increased influx of interest from a number of areas.
According to Sahm Adrangi, Issues regarding the Fairholme Fund, which holds 22.7 million shares of St. Joe Company, may make any further progression increasingly difficult. The Securities and Exchange Commission has implemented a number of new regulations that will require Fairholme Fund to dump $10 million shares by December 1st of this year, making the path to success much more difficult. Chairman of the board at St. Joe Company, Bruce Berkowitz, is also the fund manager at Fairholme Fund, which presents a possible conflict of interest that could lead to litigation. He could decide to step down, but this would put a significant strain on the stock value, and there could be an exponential drop as a result.
Sahm Adrangi seems to have a keen eye for detecting bad investments, and he makes the best he can out of them. While most investors would run away from investments that are doomed to failure, Sahm Adrangi and his company Kerrisdale Capital go in full force to short the stock option and make a profit. Shorting a stock is essentially betting against a company’s success and while it’s risky, Sahm Adrangi has made a fortune for himself and his company’s clients from doing just that.
Sahm Adrangi’s newest prediction making headlines are concerning his reservations over Kodak’s new KodakCoin and KodakOne systems that are currently being developed. He has called the plan around KodakOne’s proposed image licensing program “flat-out silly” and just an attempt to get investors excited rather than to serve any real purpose to their photographer customers. While Kodak promises that the KodakOne system will not only detect copyright infringement but also collect revenue for the customer for the unlicensed use of their work, Sahm Adrangi and others believe that the system just will not work due to legal and technical problems with the system.
Their newly announced cryptocurrency KodakCoin is also facing similar scrutiny from the negative report of the Kerrisdale Capital’s Chief Investment Officer. He does not believe photographers will be happy with accepting KodakCoin for their work and will insist on getting paid in real currency. The negative report states that this is all attempt to gain the money of investors by jumping on the wagon of the success of certain cryptocurrencies.
There are also issues facing Kodak due to the unscrupulous business practices of their partner company Wenn Digital as well as their own board members who have been making trades that Adrangi believes will be subject to an SEC investigation. This information was seconded by an expert who used to work as an SEC Enforcement lawyer. While only time will tell if Kodak will have to claim Bankruptcy as predicted, but with the information released it does not look good for the company.