Bruce Berkowitz

Bruce Berkowitz

Last Update: 2014-05-15
Related: Fairholme Fund
Fairholme Focused Income Fund

Number of Stocks: 47
Number of New Stocks: 2

Total Value: $9,898 Mil
Q/Q Turnover: 2%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Bruce Berkowitz Watch

  • Insisting on Being Clever

    Bruce Berkowitz - Insisting On Being Clever

    As I was driving home the other day and listening to Howard Marks (Trades, Portfolio)’ fantastic book “The Most Important Thing” on Audible, I heard a great line that I think is relevant to today’s environment:

    “It’s important to bear in mind that in addition to times when the errors are of commission (buying) and times when they are of omission (failing to buy), there are times when there’s no glaring error. When investor psychology is at an equilibrium, and fear and greed are balanced, asset prices are likely to be fair relative to value. In that case, there may be no compelling action – and it’s important to know that too. When there’s nothing particularly clever to do, the potential pitfall lies in insisting on being clever.”


  • Bruce Berkowitz Cuts Berkshire Stake in Half, Buys Vodafone and AT&T in Q1

    Bruce Berkowitz - Bruce Berkowitz Cuts Berkshire Stake In Half, Buys Vodafone And AT&T In Q1

    Bruce Berkowitz (Trades, Portfolio), a fund manager known for consistently correct prescient bets on undervalued assets, has recently piled his Fairholme Fund (Trades, Portfolio) high with shares of Fannie Mae and Freddie Mac, mortgage entities whose fates hang in a legislative balance. He has also been both a fan of Warren Buffett (Trades, Portfolio) and a holder of his company, Berkshire Hathaway (BRK.A)(BRK.B). But in the first quarter, he cut the holding, which had been his tenth largest, in half, and bought stocks of two additional companies: Vodafone Group PLC (VOD) and AT&T Inc. (T).

    Berkowitz started his Berkshire B-shares stake in 2009, when the price plunged to as low as an average of $59 per share. By the end of the year, he had accumulated 12,075,350 shares, of the company. He subsequently bought and sold more shares of the company, but he reduced the stake to its smallest yet in the first quarter. The investor cut 421,300 shares, or 59.32% of the holding, keeping just 288,935 shares, and relegating it to 0.36% of his portfolio.


  • Bruce Berkowitz Leads Returns for First Quarter with Bet on Fannie Mae, Freddie Mac

    Bruce Berkowitz - Bruce Berkowitz Leads Returns For First Quarter With Bet On Fannie Mae, Freddie Mac

    Bruce Berkowitz (Trades, Portfolio) still has almost 42% of his Fairholme Fund (Trades, Portfolio) (FAIRX) in American International Group Inc. (AIG), a holdover from his massive bet on U.S. financials post-economic crisis. As of year-end, he also holds massive stakes in his new venture, national home mortgage entities Fannie Mae (FNMA) (20 million common shares and 66 million preferred shares) and Freddie Mac (FMCC) (52 million preferred shares). The average gain of the new positions is the highest of all investors tracked by GuruFocus over the past six months, beating out those of Robert Karr (Trades, Portfolio), FPA Capital Fund (Trades, Portfolio) and Seth Klarman (Trades, Portfolio), who come after with him double-digit gains. In the past half-year, the Fairholme Fund (Trades, Portfolio)’s new positions have advanced 69.67%, while all of Bruce Berkowitz (Trades, Portfolio)’s new stocks went up 44.24%.


  • Bruce Berkowitz - There Is No Debate, Fannie and Freddie Are Private

    Bruce Berkowitz - Bruce Berkowitz - There Is No Debate, Fannie And Freddie Are Private

    Bruce Berkowitz (Trades, Portfolio) has a big position in Freddie and Fannie preferred shares.

    Over the past nine months he has done very well with that position.


  • Bruce Berkowitz’s Only New Stock - A Miner

    Bruce Berkowitz - Bruce Berkowitz’s Only New Stock - A Miner

    Yet again this quarter, Bruce Berkowitz (Trades, Portfolio) acquired an array of types of embattled Fannie Mae (FNMA) and Freddie Mac (FMCC) stock, as congress works out the fates of the two mortgage entities, and decides what investors will receive. Being so deep into this bet, Berkowitz has shown little interest in U.S. corporate stocks, where he formerly concentrated. He did, however, buy shares of one new company in the fourth quarter: Imperial Metals Corp. (TSX:III).

    Berkowitz’s new position is sized at 2,705,300 shares, making up 0.44% of the Fairholme Fund portfolio, and valued around $36.3 million. The company’s shares cost around $14 on average during the quarter.


  • Bruce Berkowitz Comments on Fannie Mae and Freddie Mac

    Two of our best performers during the period were Fannie Mae (FNMA) and Freddie Mac. Both are absolutely essential for uniquely- a merican, affordable mortgages. If you disagree, try getting a 30-year, sub-5% mortgage outside of the United States. In 2008, both companies agreed to U.S. conservatorship and extraordinarily harsh terms and conditions during a time of global crisis. The plan worked. Fannie and Freddie saved the day, repaid nearly every penny of cash received from the u . s . Treasury, and can look forward to resuming a prosperous future based just on the aging of assets held. However, many believe Fannie and Freddie will be victims of a government-sponsored expropriation that brings our country closer to a future conceived by George Orwell in his novel, 1984 . We disagree


  • Bruce Berkowitz Comments on Sears Holdings

    Headlines shout of Sears (SHLD)' disastrous 2013 loss of $12 per share. A longer history shows that since the merger of Sears with Kmart, about 9 years ago, s ears has distributed over $66 of cash per share via buybacks and spin-offs and has paid down $27 per share of a pension liability that is no different, in our view, from debt. Fairholme research estimates that the fair value of s ears' net assets exceeds $150 per share. If our research is accurate, we expect s ears' market price of $38 to increase to this value over time.


  • Bruce Berkowitz's Fairholme Allocation Fund Annual Letter

    Mutual fund investing involves risks including loss of principal. The chart below covers the period from inception of The Fairholme Allocation Fund (December 31, 2010) to December 31, 2013. Past performance information quoted below does not guarantee future results. The investment return and principal value of an investment in The Fairholme Allocation Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance i nformation quoted below. Performance figures assume reinvestment of dividends and capital gains, but do not reflect a 2.00% redemption fee on shares redeemed within 60 days of purchase. Any questions you may have, including most recent month-end performance, can be answered b y calling Shareholder Services at 1.866.202.2263. The S&P 500 Index is a broad-based measurement of changes in the stock market, is used for comparative purposes only, and is not meant to be indicative of The Fairholme Allocation Fund's performance, asset composition, or volatility. The Fairholme Allocation Fund maintains a focused portfolio of investments in a limited number of issuers and does not seek to diversify its investments. This exposes The Fairholme Allocation Fund to the risk of unanticipated industry conditions and risks particular to a single company or the securities of a single company. The Fairholme Allocation Fund's performance may differ markedly from the performance of the S&P 500 Index or the Barclays Capital U.S. Aggregate Bond Index in either up or down market trends. The performance of the S&P 500 Index is shown with all dividends reinvested and does not reflect any reduction in performance for the effects of transaction costs or ma nagement fees. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged market-weighted index comprised of investment grade corporate bonds (rated BBB or better), mortgages, and U.S. Treasury and government agency issues with at least one year to maturity. Investors cannot invest directly in an index. As reflected in its current prospectus dated April 1, 2013, The Fairholme Allocation Fund's expense ratio is 1.01%, which included acquired fund fees and expenses that are incurred indirectly by The Fairholme Allocation Fund as a result of investments in securities issued by one or more investment companies. Effective as of the close of business on February 28, 2013, the sale of shares of The Fairholme Allocation Fund has been suspended to new investors, subject to certain exceptions.

    January 29, 2014


  • Fairholme Fund 2013 Shareholder Letter - Pegs Sears Valuation at $150 Per Share

  • Fairholme Hedge Fund Builds on 25 Years of Berkowitz Success

    Bruce Berkowitz (Trades, Portfolio) may have made his name with his $11 billion mutual fund, but it's his partnership that's making headlines these days.

    While the average hedge fund was mired in the single-digits in 2013—the HFRX Global Hedge Fund Index stood at 6.72% for the year—Berkowitz's $200+ million Fairholme Partnership Fund was up 33% net of fees. Berkowitz launched the long-only hedge fund (which has a Caymans-based counterpart, the Fairholme Offshore Partners Fund) with $23 million of internal capital in January 2013 and opened it to outside capital in October.


  • Bruce Berkowitz's Other Stocks

    Bruce Berkowitz - Bruce Berkowitz's Other Stocks

    Believe it or not, though he runs a highly concentrated portfolio, fund manager Bruce Berkowitz (Trades, Portfolio) has other stocks besides his outsized Fannie Mae (OTCBB:FNMA) and Freddie Mac (OTCBB:FMCC) ownership he has claimed for his firm, the Fairholme Fund (Trades, Portfolio), and the leftover financial stocks from his previous financial crisis game plan.

    Though Berkowitz has made a noted killing on financial stocks such as AIG (AIG), his proposed strategy to save Fannie Mae and Freddie Mac still hangs in the balance. Berkowitz in November entered the heated debate among lawmakers concerning whether to wind down the two mainstays of the national mortgage industry, and offered to buy their insurance businesses. White House officials rejected the proposal, but lawmakers may be warming to the idea Berkowitz supports of restructuring – rather than shuttering – the companies, which would spell benefits for shareholders.


  • Eric Sprott – From Hero to Zero?

    Bruce Berkowitz - Eric Sprott – From Hero To Zero? On February 5, 2012, I wrote an article titled Bruce Berkowitz – From Hero to Zero? This is what I said in the first two paragraphs.

    “Within less than two years, Bruce Berkowitz, founder of Fairholme Funds, went from being a hero to being a zero in the eyes of fickle investors. On January 12, 2010, Morningstar gave Berkowitz the Fund Manager of the Decade award. Everything was perfect. Everybody was in love with this guy. As investors piled in, his assets under management grew from $10 billion to $20 billion.  

  • Former Fairholme Fund Managers' GoodHaven Fund - Top Stocks

    Bruce Berkowitz - Former Fairholme Fund Managers' GoodHaven Fund - Top Stocks After spending several years buying the most battered financial companies of the 2008 to 2009 financial crisis, Bruce Berkowitz this year is busy loading his mutual fund, the Fairholme Fund (FAIRX), with shares of the government-rescued Fannie Mae and Freddie Mac. He has also opened his own hedge fund. But before these periods, when he was running a successful and rather risk-averse mutual fund and named hedge fund manager of the decade, he worked with two men, Larry Pitkowsky and Keith Trauner. In 2010, these two investors left to found a separate firm, the GoodHaven Fund (GOODX).

    Pitkowsky and Trauner’s fund operates on many of the same principles that initially made the Fairholme Funds great. The firm takes a long-term view, and, according to its website:  

  • Gov’t Finally Responds to Fairholme Suit

    Bruce Berkowitz - Gov’t Finally Responds To Fairholme Suit Here is the gov’t response to Fairholme:

    Gov’t response RE Fannie-Freddie  

  • Bruce Berkowitz on Fairholme's Bid for Fannie Mae and Freddie Mac

    Bruce Berkowitz - Bruce Berkowitz On Fairholme's Bid For Fannie Mae And Freddie Mac Bruce Berkowitz wants to buy Fannie Mae (FNMA) and Freddie Mac.


  • Fairholme Capital Management Submitted a Proposal to Purchase MBS Insurance Business from Fannie and Freedie

    Bruce Berkowitz - Fairholme Capital Management Submitted A Proposal To Purchase MBS Insurance Business From Fannie And Freedie Fairholme Capital Management ("Fairholme") today announced that it has submitted a proposal to relevant federal government officials for the purchase by private investors of the mortgage-backed securities insurance businesses of the Federal National Mortgage Association ("Fannie") and the Federal Home Loan Mortgage Corporation ("Freddie").  

  • Berkowitz: 'It Doesn’t Pay to Bet Against America' – Low P/E Stocks

    Bruce Berkowitz - Berkowitz: 'It Doesn’t Pay To Bet Against America'  – Low P/E Stocks In his July 2013 letter to shareholders, Bruce Berkowitz demonstrated his signature communication gift, to explain-inspire at the same time. Guru Berkowitz wrote: “Eighty-five percent of net assets are invested in AIG, Bank of America, and others damaged by our country’s residential real estate bubble. We bought when most thought them dead. Clearly, they were not and we helped prove the point. Our initial investments reaffirmed a deeply held – and historically profitable – belief that it doesn’t pay to bet against America.”

    The current portfolio of Bruce Berkowitz’s Fairholme Capital Management lists 19 stocks, 2 of them new, a total value at $7.69 billion, and a quarter-over-quarter turnover of 1%. The portfolio is weighted with top three sectors: financial services at 68.4%, consumer cyclical at 11.2% and ETF, options, preferred at 7.2%. Guru Berkowitz has averaged a return of 18.73% over 12 months, according to the GuruFocus Score Board of Gurus.  

  • Why Sears Is Not Too Big to Fall

    Negative macroeconomic trends, such as consumer credit contraction, housing market downturn, and increases in commodity costs, have negatively affected the retail industry. Yet the economic downturn, which followed the 2008 financial crisis, has not hit all retailers equally. Whereas Sears Holdings Corporation (SHLD) has struggled to grow, Kohl’s Corp (KSS) is expected to continue on its positive growth trajectory.

    A Solid Business Model  

  • Bruce Berkowitz Discusses His Financial Investments

    Bruce Berkowitz - Bruce Berkowitz Discusses His Financial Investments Bruce Berkowitz is one investor that I like to study. I like to run an adequately diversified portfolio, taking advantage of what I consider to be numerous high-probability situations. I imagine certain probabilities with each investment, and I look at diversification in two ways: One is through the various positions I currently have, and one is through the positions I will hold in the future. The latter refers to my thesis that over time, buying undervalued stocks over and over again will work. There will be some investments that don’t work out, but over time, on balance, it works.

    I think some investors who are much more concentrated than I am focus more on the latter aspect of this type of thinking. Bruce Berkowitz is an example of a focused investor. Eddie Lampert, Mohnish Pabrai and Allan Mecham are other investors who focus. They each own just a few stocks, and their top idea represents a major part of their portfolio. Perhaps this is part of the reason for their huge returns over time. I run portfolios that are more diversified, but these investors often provide me with great ideas to research.  

  • For Bruce Berkowitz Fans - Akanthos Value Investing Congress Presentation on Fannie/Freddie Preferreds

Add Notes, Comments or Ask Questions

User Comments

ReplyGurufocus - 7 months ago
"where's the fannie and freddie?"

They are in the portfolio of Fairholme Fund:
ReplyA632784 - 7 months ago
where's the fannie and freddie??????????????????
ReplyGegogego - 8 months ago
Why are Freddie Mac and Fannie Mae not listed in current holdings or recent buys?

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