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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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St Joe: Bedeviled

C. HUYGENS - Thursday, July 07, 2011
Advisen, the insurance industry newsletter, headlined the story this way. St. Joe Getting Killed As Company Reveals SEC Is Probing Financial Reports. According to Advisen, the SEC has started a formal investigation of St. Joe and Fairholme Capital, the company's largest shareholder. Bruce Berkowitz, the founder of Fairholme, is also the Chairman of St. Joe (NYSE:JOE) which is the largest landowner in the state of Florida.

The Financial Times (July 6, McCrum) observes that that St. Joe was a pulp and paper company formed in the 1930s that became a property investor and then housebuilder. St Joe was forced to halt most of its property development in the wake of the housing bust. However the Watersound-based company has largely refused to write down the value of its real estate, on the basis that last year’s opening of the Northwest Florida Beaches International Airport in the centre of St Joe’s forest land will spur commercial development.

St. Joe is no stranger to litigation and intrigue. Huygen's noted earlier this year that St. Joe distinguished itself by achieving the rare reputation ranking of zero among its peer group. The Securities and Exchange Commission is investigating how St Joe, a US property investor, accounts for the value of its almost 600,000 acres of land in north-west Florida.

Turning to current metrics, St. Joe is demonstrating ongoing depressed reputation metrics according to the Steel City Re Corporate Reputation Index. Over the trailing twelve months, the company's ranking rose from the 1st to the 5th percentile rank among the 139 firms comprising the Real Estate Development sector. To be clear, only 132 firms outranked it reputationally which may explain why it has been underperforming its peer group by 45%. Uncertainty is in the air. The reputation vector has been up and down quite a bit lately measuring in this past week at 44%.

Its market value is in excess of 50% intangible while the mean of its peer group is less than 10%. It is therefore curious that shortseller David Einhorn feels that the shares are overvalued owing to the excessive book value of the real estate assets. Undervalued intangibles vs. overvalued tangibles; a classic question of ethics and innovation vs. accounting. Or optimist vs. short seller: a curious battle indeed.

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