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By Jason Stipp | 02-11-2011 02:30 PM

Five Things Heating Up in the Market

Morningstar's Jeremy Glaser comments on hot valuations in private tech firms, scenarios at St. Joe, more movement in M&A, inflation flags, and more.

Jason Stipp: I am Jason Stipp for Morningstar, and welcome to the Friday Five.

It's still cold here in Chicago, but things are heating up in the market. Joining me with a market forecast is Morningstar's markets editor, Jeremy Glaser.

Jeremy, thanks for joining me.

Jeremy Glaser: Jason, always a pleasure.

Stipp: So what do you have for the Friday Five this week?

Glaser: Well this week we'll see that it's heating up at Twitter, at St. Joe, inflation might be heating up, some mergers in the exchanges, and also at AOL.

Stipp: So we got potentially a value for Twitter. I know Twitter is something that everybody talks about in the corporate world: Who is using Twitter? Are you Twitter? How much is Twitter worth?

Glaser: It is hard to get too excited about some of these valuations, because they represent companies buying little slices. But according to the Wall Street Journal, Twitter is being valued at between $8 billion and $10 billion, which is just astounding, not only in how much money that is, but how much it's grown in just a short couple of months, and it shows that the tech bubble is alive and well, that people are willing to spend plenty of money for a company such as Twitter. We have seen similar numbers bandied about for Groupon and Facebook and other very large tech companies that are growing very quickly that investors really want a piece of.

I think some of them will eventually come to the IPO market. We will see how much they are really worth, but in the meantime it is amazing just to see how fast these valuations are growing.

Stipp: It's maybe more of a better gauge of excitement right now than perhaps actual value.

Glaser: Yeah, exactly.

Stipp: So, on the second company, Jeremy, this is one that's been in the news, a real bone of contention down in Florida: St. Joe. What's heating up there?

Glaser: We have heard a lot about St. Joe over the past couple of months, and management has come out and said that they are exploring strategic options for the company including changing the direction of what they are doing, but also potentially having a sale.

Now, Bruce Berkowitz has taken a very large stake in St. Joe, and he has a history of shareholder activism, of trying to unlock value in companies where he thinks that there is a lot there. I think St Joe is a situation in which as a private company, they may be able to produce more value.

They own a lot of land that potentially is very valuable, but it could be years, if not decades, before that value can really be realized. Under the spotlight of being a public company and having to report quarterly results, it is very difficult for shareholders to get that money, but someone who has a longer time horizon, and isn't on that same treadmill of earnings, might be able to extract more value. So I think that this is a good thing for St. Joe shareholders and something that hopefully will create a lot value for people over time.

Stipp: On the economic front, Jeremy, inflation, it feels like it is heating up to the consumer. Is Bernanke worried about it yet, though?

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