Sahm Adrangi has published a negative report explaining his short position in The St. Joe Company real estate project. The St. Joe Company is a real estate company that promised investors to transform a vast area near Panama beach into a tourist destination. The company has given a description of an attractive establishment that will attract retirees and lucrative businesses. However, the investment guru, Sahm Adrangi thinks otherwise.
According to his research, the St. Joe Company will not be able to build houses that justify their 1 billion dollar valuation. The land they plan to build on is far from the beach and located in a swampy area. The actual land scape is a direct contrast of the beach described in the company’s pitch.
The sellside assumes that approximately 2700 home sites and 400k square feet are sold every year. This paints a picture of St. Joe Company properties one of the top selling properties in the country. However, in reality there is minimal development going on on the ground. Building department inquiries are close to none and permit fillings are almost non-existent.
We short (misguided) innovation for a living, but shorting bitcoin or doubting cryptocurrencies is nutty. The mkt opportunity is massive https://t.co/Q4vsI9nuyf
— Sahm Adrangi (@SahmAdrangi) September 25, 2017
In his report, Sahm Adrangi said that long term investors who have waited for long to reap the benefits of their investment should prepare to wait longer for that to happen. As at now, he speculates that the company’s share are worth 40% less than what they were. This decrease in share value is also catalysed by the SEC limitations which make it difficult to liquefy equity holdings.
Sahm Adrangi is the founder and president of Kerrisdale Capital Management, LLC. Kerrisdale is an investment company that focuses on fundamentally oriented investments. Their aim is to help their clients benefit from their investments in the long term. In line with their mission, they also specialize on event driven situations.
Before founding Kerrisdale, Sahm Adrangi worked as an investment analyst with Longacre Fund Management. He had an opportunity to analyse investments worth over 1.2 billion. He analysed and researched both credit funds and equity funds. This helped him sharpen his strength in analysing investments.