My guest on the show today is Jorge Gonzalez, the CEO of The St. Joe Company. St. Joe is a 2.53 billion dollar market cap company whose main asset is a huge landholding in Northwest Florida. A lot of investors may remember that the company has been the subject of a number of short reports over the last decade but since Jorge became CEO in 2015, St Joe has consistently grown its revenue and EBITDA-and has diversified its revenue base. Also, after a period of time in which the stock was unable to break out, over the last year it has risen to levels that had not been seen since the mid-2000s.
Given the company’s recent success, I was excited to talk to Jorge about his vision of the future of the company and what people may not be appreciating its asset base. Specifically, we discussed:
- What it means to operate as an owner-oriented company;
- The demographic trends that are fueling growth in Northwest Florida;
- What the shorts have gotten wrong over the years;
- How the company approaches the risk of hurricanes in the region; and
- What Jorge has learned from the company’s Chairman, Bruce Berkowitz of Fairholme Capital
This episode of Compounders: The Anatomy of a Multibagger is sponsored by Tegus, an innovative and disruptive company that is changing the way professional investors work. For more information, please visit: www.tegus.co/
Timestamps:
- 1:18 Introduction
- 2:36 Being named the next CEO of St. Joe
- 3:19 Shifting St. Joe’s strategy, culture, and process of execution
- 4:08 Adjusting corporate strategy to expand the total market size
- 5:18 St. Joe’s vast land holdings and unique moat
- 6:38 Florida’s demographic shifts and how that might affect St. Joe
- 8:18 How COVID has affected the trends driving St. Joe’s business
- 9:52 Handling cyclicality at a macro and geographic level
- 11:46 Building a recurring revenue stream in a traditionally cyclical business
- 15:28 Further enhancing an already improving business model
- 18:05 Balancing an expansion beyond Florida with internal investment opportunities
- 19:10 Choosing between internal development, partnerships and the sale of land assets
- 20:58 The synergies that exist between residential, commercial, and other infrastructure
- 24:04 Ensuring expertise exists within a small core team
- 25:45 What does a good partner look like for St. Joe?
- 27:36 What does St. Joe mean by “owner-oriented?”
- 29:19 Why St. Joe invests so heavily in growth over buying back shares
- 30:52 Lessons learned from Bruce Berkowitz
- 31:51 How decisions get made at St. Joe
- 34:40 How to decide which people should be on the bus
- 37:17 What factors did David Einhorn get right in his 2015 short analysis?
- 38:42 St. Joe’s remaining developable acreage
- 40:14 How St. Joe benefits from a 50-year master development plan
- 41:58 What attractions are missing from St. Joe’s core counties
- 42:58 Building win-win relationships with government stakeholders within the community
- 45:27 How St. Joe avoids being seen as “too powerful” within the community
- 46:37 Building storm resiliency in an area directly affected by environmental challenges
- 49:49 The benefits of building modern infrastructure from scratch
- 50:57 How modern community design has improved over the years
- 52:35 Futureproofing a home or community as a real estate developer
- 55:14 How an investor should approach St. Joe
- 58:31 St. Joe’s key performance indicators and measures of success
- 59:47 Why St. Joe is still a “cheap” investment
- 62:07 Looking at book value per share as an assessment of St. Joe’s progress
- 62:50 Instilling a long-term mentality within a corporate culture
- 64:14 Why mistakes are sometimes more valuable than are successes
- 65:42 The most misunderstood aspect of St. Joe
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24 авг 2024