Fairholme Fund Manager Berkowitz Bets on Sears

Bruce Berkowitz, who was named mutual-fund manager of the decade in 2010, has seen his Fairholme Fund lose 89% of its assets from its 2011 peak due to poor performance—but he hopes to turn things around with a major bet on the battered Sears Holdings Corp. This according to an article in The Wall Street Journal. The Fairholme Fund has lost 12.9% so far this year compared to the 9% gain in the S&P 500, the article reports. It adds that Berkowitz is “unapologetic” for the poor returns, saying that “he always has promised his investors ultra-concentrated, often contrarian bets […]

Liquidity Concerns Increasing for Fairholme Fund

The Fairholme Fund, which was launched in 1999 by Bruce Berkowitz, has seen investors pull out more than $16 billion over the past six years due to poor performance, an exodus that is raising liquidity concerns. This according to a recent article in The Wall Street Journal. Morningstar estimates show the large-cap value fund has “shed assets every month since March 2011” and is now a “shadow of its former self,” according to the article– which cites comments by Morningstar analyst Kevin McDevitt concerning the fund’s increased liquidity risk in the wake of steady outflows and forced sell-offs. McDevitt’s concern, […]

Berkowitz Still Likes Those Unloved Financials

Bruce Berkowitz’s Fairholme fund got some bad news recently after a court ruling hit Fannie Mae and Freddie Mac hard. But over the long term, Berkowitz’s track record is impeccable, and in a recent interview with WealthTrack, he talked about the process that led him to go big into financial stocks amid the 2008-2009 financial crisis.

Berkowitz Expects AIG, BOA To Quadruple in 5-7 Years

Top fund manager Bruce Berkowitz says he believes financials like AIG and Bank of America remain the best value opportunities in the market right now, even though they jumped sharply in 2012. Berkowitz tells Bloomberg that he would buy more of BOA if he could, but mutual fund regulations prevent him from doing so. He thinks that as government-sponsored enterprises, like those that involve mortgages, run out, banks and insurers could have a “huge market” of loans to take on, enhancing profits. In a separate video, Berkowitz says he thinks shares of financials like AIG and BOA will quadruple over […]

Berkowitz’s Top Stocks

In a recent Fortune article, top fund manager Bruce Berkowitz discusses his fund’s struggles in 2011 and its bounce-back in 2012, as well as some of his favorite stocks in the market right now. “I think it’s fair,” Berkowitz said of criticism he received when his fund, which had been extremely successful over the long term, was hit hard in 2011. “What’s not fair is to believe that a manager or a businessperson is in such control of companies that they can control any one-year period or two-year period. I’ve not seen it done. There’s a reason Warren Buffett judges […]

Berkowitz Still Going Against The Crowd On Financials

Top fund manager Bruce Berkowitz remains high on beaten-down financial stocks, saying that many have improving business trends and balance sheets and extremely cheap shares. Berkowitz tells WealthTrack’s Consuelo Mack that he started buying “systemically important companies” at huge bargains after the government recapitalized them, and after busines trends were recovering. Many were priced below liquidation value back then, he says — and they still are. But, he says, investors let fears keep them from believing the facts, and they have shunned financials. Berkowitz talks about the importance of ignoring the crowd, and why he’s comfortable running a concentrated portfolio.

Berkowitz’s Checklist and Lessons

After struggling in 2011, Morningstar Fund Manager of the Decade Bruce Berkowitz is rebounding strong in 2012, with his Fairholme fund in the top 1% of funds in its category year-to-date, according to Morningstar.com. And at a recent Columbia Investment Management Association conference, Berkowitz laid out his checklist for analyzing a company and its stock, and Market Folly offered a summary: 1. Can you kill it? Is there adult supervision at the company? 2. Is the company essential? Does it depend upon the kindness of strangers? 3. What can the company make? Profitability for owners. 4. Management – honest in past […]

Berkowitz Undeterred

Bruce Berkowitz, who was one of Morningstar’s Fund Managers of the Decade in the 2000s but saw his flagship portfolio hit very hard in 2011, is sticking to his guns. “Improving book value levels and ratios show companies recovering from tough times, prepared for uncertainty, and capable of profits without excess leverage,” Berkowitz writes in Fairholme Capital’s year-end manager’s report (click here for a PDF copy). “The Fund’s performance last year makes little sense in light of such positive trends and we can only hypothesize from public comments that investors did not fathom our financials’ assets. There appears little understanding […]

Berkowitz: For Banks, Focus on Today’s Data — Not Unfounded Future Fears

Bruce Berkowitz, who in 2010 was named one of Morningstar’s Fund Managers of the Decade but has been hit hard in the past year, says he continues to be high on unloved financial stocks that have been dragging his portfolio down. Berkowitz tells WealthTrack’s Consuelo Mack that all of the negativity about financials has driven many of their stock prices down to incredibly attractive levels. “The negatives are all uncertainty about the future. And what I try and do is focus on the facts of today,” he says. “So, when you look at the income statements, they’re making huge cash […]

Berkowitz Still Thinks Big Financials Will Get Their Due

Bruce Berkowitz, one of Morningstar’s Fund Managers of the Decade for the 2000s, is sticking by his conviction that AIG and other financial stocks are undervalued and will make big gains. “Our inclination remains to run from the popular and embrace the hated where prices tend to reflect such mistrust,” Berkowitz wrote in a report to investors, according to Bloomberg. “Often, we are ahead of the crowd, too early, and appear wrong for a time.” In addition to AIG, Berkowitz says he still thinks banks like Bank of America and Citigroup will prove wary investors wrong. “Financials with enormous cash […]

Berkowitz on Ignoring the Crowd

In a wide-ranging three-part interview with Morningstar’s Don Phillips, top value investor Bruce Berkowitz discusses several aspects of his investment approach, including the willingness to go against the crowd and the decision to run a focused portfolio smaller than those of many other mutual funds. “At the end of the day, investing is about one person has to take the responsibility of pulling the trigger, and group-think always dummies down to the lowest common denominator, and so, you ignore the crowd,” Berkowitz says. “It’s still painful, but it’s worked.” As for portfolio size, he adds, “Given the nature of companies […]

Berkowitz Still Confident in Financials

Bruce Berkowitz remains high on financial stocks, and says his conviction about his financial holdings has only grown stronger. “I’ve been able to see their earnings for the past few quarters, the trends are getting better, the balance sheets are building, tangible book value is growing,” Berkowitz tells Bloomberg from the Morningstar Investment Conference. “The problems from 2007, 2008, still have a ways to burn through, but we’re more than, I would say more than halfway through the problem now.”  

Top Managers Shun Bank Stocks

While it’s now more than two-and-a-half years since the collapse of Lehman Brothers and the worst of the financial crisis, several top investors are still avoiding bank stocks. “We find it hard to believe the banks have cured all their bad asset problems, and they aren’t transparent enough for us to understand the risks,” Clyde McGregor, whose Oakmark Equity and Income Fund has beaten 99% of peers over the past decade, tells Bloomberg. “Can you still make money in banks? Maybe. But we can build a portfolio that doesn’t demand owning them.” McGregor says a big part of the problem […]

Berkowitz Talks Financials, Europe, and His Mistakes

In a lengthy joint interview with Advisor Perspectives and GuruFocus.com, Morningstar Fund Manager of the Decade Bruce Berkowitz offers his take on the market and several of his main holdings. Berkowitz, who went heavy into financial stocks after the financial crisis, says he remains confident in his financial holdings. “Loans created and underwritten since 2009, or even at the very tail end of 2008, are good loans, well documented, with better credit quality, better yields, and better fees,” he explains. “You have this digestive period of bad loans, and at the same time you have the ingestion of good loans. […]