Bruce Berkowitz (Fairholme Capital Management)

Bruce Berkowitz (Fairholme Capital Management)

Postby winston » Wed May 20, 2015 7:36 am

‘Smart Money’ Stocks: Bruce Berkowitz (Fairholme Capital Management)

Next up we have Bruce Berkowitz, manager of the $5.7 billion Fairholm Fund (MUTF:FAIRX).

Berkowitz is known for managing a highly concentrated portfolio. The top 10 holdings of his flagship fund make up fully 83% of the portfolio. That would be considered highly concentrated even for an aggressive hedge fund, let alone a mutual fund available to the general public.

You have to be confident and immune to criticism — or perhaps just crazy — to make bets that concentrated. But Berkowitz pulls it off. Despite having an annus horribilis in 2011 in which he lost 32% in a year in which the S&P 500 eked out a small gain, Berkowitz has absolutely crushed the market over the past 15 years.

Over that span, Berkowitz’s flagship fund has returned 11.7% per year, leaving the S&P 500’s 4.2% annual returns in the dust.

So, what’s Berkowitz up to these days?

Actually, he’s been doing more selling than buying. Over the past several quarters, Berkowitz has been unloading the shares of American International Group Inc (NYSE:AIG) that he originally purchased in 2010. He’s also been reducing his position in Bank of America Corp (NYSE:BAC), which, like AIG, he bought on the cheap starting in 2010.

Of Berkowitz’s largest holdings, the only one he appears not to be selling at the moment is Sears Holdings Corp (NASDAQ:SHLD), Eddie Lampert’s pet project. I’ve written about Sears before, calling it Lampert’s Berkshire Hathaway.

Believe it or not, that actually not a compliment.

Berkowitz currently has about 20% of his portfolio in Sears, and he’s been adding to the position aggressively since 2012. As much as I respect Berkowitz, I wouldn’t be in a hurry to follow him into this trade. Sears continues to struggle in a very difficult retail environment, and I question whether Lampert will be able to squeeze the value out of the company before it hits real financial distress.

So, is there any insight we can glean today from Berkowitz’s portfolio?

Absolutely. Berkowitz currently has about 13% of his portfolio sitting in cold, hard cash. As a value investor, he likes to have dry powder on hand to take advantage of selloffs. That’s something we might all consider, particularly with the U.S. market sitting near all-time highs.

Source: Investor Place
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Bruce Berkowitz (Fairholme Capital Management)

Postby winston » Mon Feb 20, 2017 6:20 pm

A good investment is not entirely dependent on the balance sheet, it’s also about the management team.

“We tend to be more about the jockey than the horse.

It’s important to under- stand how people are going to behave under stress.

You don’t have to predict the future if you know the company has the assets and management to do well in difficult times.

I believe that’s when the seeds for exceptional performance are planted.”

- Bruce Berkowitz
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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