David Einhorn, the hedge-fund manager who famously made a fortune by short-selling shares of Lehman Brothers as the company plunged into bankruptcy, said today that shares of St. Joe, a Florida real-estate developer, could go to zero. The stock promptly took a nearly 10 percent tumble and finished out the day’s trading down 9.7 percent.
Einhorn said that the company needs to take major asset-impairment charges. Bloomberg reports:
“The best properties have been sold, many lots were sold to speculators during the boom, and when the boom ended, business essentially stopped,” Einhorn, who runs hedge-fund operator Greenlight Capital Inc., said today at the Value Investing Congress in New York. “There’s little evidence of how Joe spent so much money on these developments. Many developments are ghost towns and little value remains.”
Einhorn also said, “Management should sell the company, but it can’t because the stock price is too high.” In other words, St. Joe is trading at Mercedez Benz prices when it runs more like a Yugo. It must be comforting to Einhorn to know that he can still cause a major stir just by opening his mouth.