Skip to main content
Columnists
David Einhorn
Jax Daily Record Monday, Oct. 26, 201512:00 PM EST

Hedge fund manager drops bet against St. Joe

Share
by: Mark Basch Contributing Writer

Five years after igniting a firestorm by publicly trashing The St. Joe Co., prominent hedge fund manager David Einhorn has dropped his short position — basically a bet against the stock — in the company.

“After being short for almost 10 years, we decided to declare victory and move on, even though the shares remain somewhat overvalued,” Einhorn said last week in a letter to shareholders of his fund, according to a copy of the letter posted on ValueWalk.com.

Although he said he’s been shorting St. Joe for 10 years, it was in October 2010 that Einhorn announced his short position at an investor conference, saying the real estate developer’s land holdings were overvalued.

Those comments, several months after St. Joe moved its headquarters from Jacksonville to WaterSound in the Florida Panhandle, started a chain of events that led to an upheaval in St. Joe’s management.

The company’s largest shareholder, Bruce Berkowitz, supported the stock in response to Einhorn’s bets against it. Berkowitz eventually became chairman of St. Joe’s board and brought in new management to run the company.

The feud over St. Joe between Berkowitz and Einhorn, both well-known fund managers on Wall Street, was dubbed “the clash of the financial titans” by the New York Post.

Einhorn’s letter last week, which detailed the current state of his Greenlight Capital hedge fund, said he shorted St. Joe at $36.90 a share and covered at $17.17.

When investors short a stock, they borrow shares of the stock and then sell them, expecting the price to fall. When the price does drop, they cover, or buy shares at the lower price to pay off the debt, making a profit on the difference.

When Einhorn announced his short position five years ago, St. Joe was trading at $24.54. It fell in response to his comments and traded as low as $12.72 in November 2011, but has been valued mostly in the upper teens recently. It has rallied this month and was trading at about $21 last week when Einhorn’s letter was sent.

Landstar drops after earnings report

Landstar System Inc.’s stock opened lower Friday morning after the Jacksonville-based trucking company forecast fourth-quarter earnings slightly below analysts’ forecasts.

After the market closed Thursday, Landstar reported third-quarter earnings of 90 cents per share, 8 cents higher than the third quarter of 2014 and within the company’s forecast range of 87 cents to 92 cents a share.

Revenue rose 3 percent to $842 million.

“Overall, Landstar had a very good third quarter. Currently, industry fundamentals remain similar to those experienced in the 2015 third quarter,” CEO Jim Gattoni said in Landstar’s conference call with analysts.

The company is forecasting fourth-quarter earnings of 85 cents to 90 cents a share, similar to the third quarter. However, analysts were projecting earnings between 86 cents and 95 cents a share, according to Thomson Financial.

Landstar’s stock fell as much as $3.58 to $61.63 in the early minutes of trading Friday after the earnings report. It closed Friday at $62.13.

Bank of the Ozarks coming to Jacksonville

Just a week after Community & Southern Holdings Inc. acquired a Jacksonville bank branch from CertusBank, Community & Southern announced an agreement to be acquired by Bank of the Ozarks Inc.

Atlanta-based Community & Southern has 47 branches in Georgia and just the one Florida branch in Jacksonville, but Bank of the Ozarks considers the Jacksonville office to be a big deal. The Little Rock-based company went out of its way to highlight it in the news release announcing the deal to buy Community & Southern for $800 million in stock.

“The addition of CSB’s Jacksonville, Fla., office provides us entry into the favorable Jacksonville market and expands our existing 10-office presence in Florida,” Bank of the Ozarks CEO George Gleason said in the news release.

Bank of the Ozarks, with $9.3 billion in assets, has 174 branches in nine states. Most of the bank’s Florida offices are in the Tampa Bay area, and it also has a branch in Ocala.

Community & Southern had announced the deal in June to buy the Jacksonville branch and 14 Georgia offices from CertusBank. It completed that purchase on Oct. 13.

Deutsche Bank restructures operations

As part of an ongoing upheaval of its global operations that began in the spring, Deutsche Bank last week announced a major reorganization of its business divisions and its top-level management.

However, a spokeswoman said the Germany-based company would not comment on how the reorganization might impact its plans to expand in Jacksonville.

Deutsche Bank in July received approval from the City Council for a $5.5 million incentive package to add 475 jobs over the next two years, which would bring its total employment in Jacksonville to 2,124.

The restructuring announced last week includes the departure of some top executives and a split of its corporate banking and securities unit into two divisions.

“We want to create a better controlled, lower cost and more focused bank that delivers long-term value to shareholders and great experiences to clients. The new structure and management team are essential to getting this done,” co-CEO John Cryan said in a news release.

Cryan was brought into Deutsche Bank on July 1 as the company began its “Strategy 2020” plan to restructure the company.

Several news reports last month said the company has been considering cutting about 25 percent of its global workforce as part of its plan but other than the high-level executive moves, Deutsche Bank has not announced any major cutbacks.

Aetna and Human shareholders OK merger

Shareholders of Aetna Inc. and Humana Inc. both overwhelmingly approved the planned merger of the two health care benefits companies at special meetings last week. But the $37 billion deal has a long way to go before completion.

The deal is expected to face intense antitrust scrutiny from federal officials, and the companies said they don’t expect to complete the merger until the second half of 2016.

The merger agreement came in July as both Aetna and Humana were considering moving their Jacksonville offices to other sites. Humana already said it would relocate nearly 100 employees from the Downtown SunTrust Tower to two new locations in Baymeadows and Mandarin.

Humana spokesman Mitch Lubitz said by email last week he had no update on the company’s plans for Jacksonville in light of the merger agreement.

Aetna told the Daily Record in the spring it was considering looking for new office space when its lease expires in the Aetna Building on the Southbank in 2017. However, no decisions have been announced.

Aetna employs about 775 people in that building.

Dick’s Wings expands to Panhandle

The franchisor of the Dick’s Wings & Grill restaurant chain, which operates mainly in the Jacksonville area and Southeast Georgia, has expanded to Panama City Beach.

ARC Group Inc. announced the opening of the new restaurant last week, giving it 16 restaurants in Florida along with four in Georgia.

CEO Richard Akam said the expansion to the Florida Panhandle is a strategic move for the company.

“We are capitalizing on our strong brand name recognition in North Florida and branching out further into new territories within the Southeast. Panama City Beach is a logical choice because the city experiences a significant influx of tourists each year, many of whom are from Southern states,” he said in a news release.

ARC Group is officially headquartered in Louisiana but its corporate office is in Jacksonville. In addition to its ownership of the Dick’s Wings chain, it also owns 50 percent of a company that operates another chain in the West called Wing Nutz.

ARC Group has lost money every year since going public in 2010, but last month it reported a second-quarter net profit of $40,398.

Akam said in a separate news release last week he expects the third quarter “to be another strong quarter for us.”

CSX cuts 180 jobs in Kentucky

For the second week in a row, Jacksonville-based CSX Corp. announced jobs cuts in another Southeastern state.

CSX on Tuesday said it is closing mechanical shops in Corbin, Ky., that will impact 180 employees. Those employees will be offered relocation opportunities or receive severance benefits.

The Corbin shops were used to maintain and service locomotives and rail cars used for coal trains, but a sharp drop in coal traffic has reduced the number of trains needed at CSX.

The previous week, CSX said it is cutting back operations in Erwin, Tenn., because of the reduced coal shipments, resulting in the elimination of 300 jobs.

ParkerVision gets Nasdaq extension

ParkerVision Inc. last week said the Nasdaq Stock Market has given it an additional 180 days to raise its stock price to comply with minimum price requirements and keep its stock listing.

Jacksonville-based ParkerVision’s stock has traded below $1 since March and the company announced in April that Nasdaq gave it 180 days to get its price back above $1.

That original six-month period expired last week, but Nasdaq gave ParkerVision the 180-day extension.

Keystone Heights startup files for IPO

A startup company in Keystone Heights that is developing a medical-related website filed plans for an initial public offering last week.

Lucent Pharma’s filing with the Securities and Exchange Commission said it is selling 3 million shares of stock at 10 cents each on a “best efforts” basis, as opposed to going through an underwriter.

The filing said the company was formed last year and has no operations or revenue. It is developing a website called ihealthcue.com that will offer news from the pharmaceutical and biotechnology sectors.

The company will try to generate revenue from “advertising and sponsorships, premium services, including subscriptions and licensing fees,” the filing said.

[email protected]

(904) 356-2466

Related Stories

Advertisement