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 […]

Concentrated Investing: “Go Big or Go Home”

Concentrated funds, such as Putnam Capital Spectrum Fund and Putnam Equity Spectrum Fund, seem to take the active manager’s maxim “go big or go home” further than most, according to a recent Wall Street Journal blog post. As of March 31, the 10 biggest holdings accounted for 72.1% of the Capital fund’s $6.1 billion in assets and 76.7% of the Spectrum fund’s $1.8 billion in assets. “The average U.S. stock fund with more than $1 billion has only 22% of assets in its top 10 holdings,” based on Morningstar data. The funds were started in 2009 by David Glancy and […]

Managing Risk in Concentrated Funds

Concentrated investment funds are inherently risky, but that is why a good manager may make all the difference, according to a recent piece in Barron’s. The article profiles several concentrated funds, usually holding less than 35 stocks at any given time (and thus not simply mirroring an index), that have achieved relatively low risk and better-than-benchmark returns. Such funds often fall out of favor with investors during a bull market: “We always lose assets at market peaks,” says Yacktman Focused’s Stephen Yacktman, “but we don’t change our style to influence investor deposit flows.” The fund holds 24 stocks and beat […]