s (NASDAQ: FAAFX) is a valued oriented fund headed by Bruce R. Berkowitz that focuses primarily on equity and fixed income securities. Its manager, Bruce Berkowitz
, earned his BA in Economics from the University of Massachusetts Amherst. His career can be characterized as nothing less than successful, named both the domestic stock fund manager of the year in 2009 and of the decade in 2010 by Morningstar. Inherently a follower of the Graham methodology of value investing, his success has entitled him into the annals of the timely classic, Security Analysis
. As such, it should come as no surprise that he strives to follow a rule that fellow legendary value investor, Warren Buffet derived. That is, "The first rule is: Don't lose money. The second rule is: Follow the first rule."
Since its inception in 1999, Fairholme Fund
s utilizes in-depth fundamental analysis to identify key drivers in equities that historically, were elements of success for others. The cited reasons of its success lie in its strategy of a focused core of 20-30 equities (non-diversified classification) with a recent specialization in the financial sector. This method differentiates from most other managers, who prefer to diversify among more stocks in order to reduce overall risk. He recently shifted his portfolio from defensive stocks such as Pfizer to financials because, as stated in 2009, “Financials tend to lead markets into and out of recessions”. This belief remains undeterred as recently, when speaking upon key financial stocks found in Fairholme Fund
s, "We're going to make more on these names (C/GS/MS/BAC) than we have on anything”. As a whole, his belief is that financials are not only instrumental in the recovery, but they are insulated from complete melt-down with the explicit and implicit support of the government. Continue Reading »