Let’s do the time warp again.
As everyone knows, artificial intelligence was all the buzz in 2024.
Related: Veteran trader discloses his top stock pick for 2025
The AI market grew 35% to $184 billion, up from $136 billion a year earlier, according to Statista, and many investment firms named AI companies as their stock picks of the year.
But if you’re sick and tired of tech and AI makes you cry, then come with us now back to 1992, a full year before AI-chip making colossus Nvidia (NVDA) was hatched in a Denny’s restaurant in San Jose, Calif.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💵
Long-time Wall Street veteran and hedge fund manager Doug Kass recalled those days in a recent column for TheStreet Pro.
Back then, the veteran fund manager was running the research and institutional equity departments at First Albany before eventually becoming the Director of Research for billionaire Leon Cooperman’s Omega Advisors and, more recently, running his own hedge fund.
Kass unveiled his favorite stock pick for 2025 this week, and his idea might surprise many.
Resort built by St. Joe Company Real Estate Developer
St. Joe Company
Hedge fund manager picks top stock for 2025
Doug Kass uses fundamental analysis to help him find attractive long and short stock ideas for investments.
“Ideally, especially with longs, I try to identify asymmetric opportunities in which upside reward dwarfs the downside risk,” he said.
He thinks his latest pick offers just that kind of asymmetric upside.
“If my and Praetorian Capital’s Harris Kupperman analyses are correct, St. Joe Co. is a vivid example of the fruits of that search,” Kass said, referring to the founder of the Puerto Rico hedge fund.
Doug Kass wrote his first sell-side research report on St. Joe Paper while at First Albany in 1992.
The company, which is now better known as the land developer St. Joe Co. (JOE) ., was founded 1936. The Panama City Beach, Fla., company still operates a forestry division but primarily develops real estate and manages assets.
St. Joe.’s primary activity is developing its land holdings in northwest Florida. The company divides its projects into residential, commercial and hospitality segments.
More 2025 stock market forecasts
Stocks face correction risk as Santa Claus Rally fails to deliverVeteran trader who correctly picked Palantir as top stock in ‘24 reveals best stock for ‘255 quantum computing stocks investors are targeting in 2025Goldman Sachs picks top sectors to own in 2025
In addition to development activities, St. Joe operates many assets in its commercial and hospitality segments.
St. Joe is now Kass’s largest individual equity long and it’s his top stock pick for 2025.
While St. Joe shares are down nearly 18% from a year ago, the stock has more than doubled (up nearly 140%) over the past five years.
Related: Bank of America makes surprising pivot on interest rates
The company is scheduled to report quarterly earnings next month. In October, St. Joe reported net income fell 12% to 29 cents a share from 33 cents in the year-earlier period. Total third-quarter revenue slipped 2% from a year earlier to $99 million.
Hospitality revenue rose 17% to $55.4 million and leasing revenue increased 19% to $15.6 million.
Real estate revenue dropped 32% to $28 million due to a mix of sales from different communities and the timing of homebuilder contract-closing obligations, the company said.
St. Joe said that demand continues strong: It has more than 22,000 homesites in development and plans an expanding medical campus, which promises to enhance regional health care and economic growth.
St. Joe CEO: Homesite demand still strong
“The ‘seeding and harvesting’ cycle of residential homesite development and sales is not linear and therefore not ideal for quarter-to-quarter comparisons like hospitality and leasing revenue,” Jorge Gonzalez, chairman, president and CEO, said in a statement.
“Demand for homesites remains strong with every homebuilder being ahead of or on schedule with their required contractual obligations,” he added.
Related: 5 top-performing stock picks from iconic fund managers
In his column picking St. Joe, Kass included Kupperman’s recent analysis of St. Joe.
Kass said that Kupperman attached a high net asset value — $250 a share — to the company, compared with its current share price of around $45.
“I tend to focus on hard assets with strong tailwinds, as those assets offer downside protection, with plenty of upside in what I believe to be an inflationary decade,” Kupperman said. “JOE has both of these aspects in spades.”
He noted that the Florida Panhandle was growing rapidly and St. Joe “is in the driver’s seat in terms of how it is developed.”
“By developing it intelligently, JOE doesn’t only add value to each development, but they add value to their massive landbank and all future developments that they undertake,” Kupperman said. “There is a real multiplier effect here and I think that many investors miss this.”
While the company frustrated shareholders in 2024, Kupperman said, he was trying to predict long-term value creation, and he remained confident that the shares would one day accrete toward net asset value.
Kupperman said he’d frequently met with management, “who I think are excellent, over the four years that we have owned our shares.”
“I’ve implored them to close this discount to NAV with buybacks, and they’ve done some occasional buybacks, but they’ve mostly focused on developing the land that they have,” he said.
“At first, I found this frustrating; now I’m more accepting,” Kupperman added.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
