Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jason Stipp | 06-18-2010 12:58 PM

Despite Encroaching Oil Spill, Upside Bright for St. Joe

Morningstar StockInvestor editor Paul Larson says the potential downside is capped for this coastal Florida landowner, while the upside is big at current stock prices.

Jason Stipp: I'm Jason Stipp for Morningstar. As the oil in the Gulf spreads, the effect on other companies starts to come into a sharper focus. One of those companies is St. Joe. This is a landowner and developer in Florida and it's a recent new position in Morningstar's StockInvestor portfolio. This stock is also held by some other notable investors, including Bruce Berkowitz of the Fairholme Fund.

Here with me to talk about what he sees in the value of St. Joe is Morningstar's Paul Larson. He is an equity strategist and the editor of Morningstar StockInvestor.

Thanks for joining me, Paul.

Paul Larson: Thanks for having me.

Stipp: So the first question for you, obviously, because the oil is spreading and it's starting to head toward Florida now, it seems like there could be a potential amount of risk for St. Joe. Can you explain where this company owns land and what could potentially be at risk for them?

Larson: St. Joe does indeed own a large number of parcels in the Florida Panhandle, close to 600,000 acres in St. Joe's portfolio, almost all of it in the Florida Panhandle. So the oil is indeed heading for St. Joe.

When you look at the stock, the stock is down nearly 40% from – right before the oil spill hit.

But the thing that attracts me to St. Joe is that unlike a lot of the other companies that are involved in the oil spill, like BP and Transocean, St. Joe should be on the beneficiary side of the oil escrow accounts that have been set up. You might say that whatever liability BP has for the spill is certainly going to be an asset eventually for St. Joe.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article