Fairholme Fund

Last Update: 2015-02-02
Related: Bruce Berkowitz
Fairholme Focused Income Fund

Number of Stocks: 27
Number of New Stocks: 1

Total Value: $6,414 Mil
Q/Q Turnover: 2%

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

Fairholme Fund Watch

  • Bruce Berkowitz Increases His Stakes In Fannie And Freddie

    Bruce Berkowitz (Trades, Portfolio) of Fairholme Capital has increased his stakes in Fannie Mae (FNMA) and Freddie Mac (FMCC). With Fannie and Freddie stock prices falling, they now make up a smaller position of value in Fairholmes portfolio compared to mid-2014. Bruce Berkowitz (Trades, Portfolio) is heavly invested in the GSE's and has a law suit against the government over the all of Fannie and Freddie earnings being taken by the government.

    In Fairholmes recent annual report the firm say its owns 15.5 million common shares of Fannie Mae and 14.6 million common shares of Freddie Mac valued at the end of November at $77 million. The firm went from owning 13.7 million shares of Fannie Mae and owning 11.5 million shares of Freddie Mac valued at the end of May at $111 million. The firm increased its stake in the Fannie and Freddie preferred shares. As Fairholmes increased its stake in the GSE's preferred shares the value of its stakes have fallen from $1.2 billion to $516 million as well. Fannie and Freddie positions set now at 8.7% of Fairholmes portfolio down form 15% in May of 2014. Bruce Berkwoitz is making a very contrarin bet on the GSEs and when shares fall he adds to his positions in common and preferred shares.


  • Berkowitz’s Fairholme Fund Adds Stake In Struggling Sears Canada

    Fairholme Fund (Trades, Portfolio), which renowned investor Bruce Berkowitz (Trades, Portfolio) manages, has accumulated a stake in Sears Canada (SRSC) from the partial spin-off of Sears Holdings  (SHLD). Sears Holdings continues to off-load valuable non-core assets through spin-offs and asset sales.

    The new stake reported November 6 in a 13G filing reflects a new position of 11,855,328 shares, worth ~11% of the company.


  • Fairholme Fund's Three Recent Portfolio Changes

    Bruce Berkowitz (Trades, Portfolio) is famous for the minimal amount of turnover and trades in his portfolio.

    The Fairholme Fund (Trades, Portfolio), which he founded in 1999, is highly concentrated with 26 stocks, almost 60% of which is currently in the financial services industry. In the recently updated portfolio dated Aug. 31, Berkowitz made only three trades.


  • Top Fund Managers See Massive Quote Losses In Their Stakes In Frannie and Freddie

    Fairholme Fund's (Trades, Portfolio) and Perry Capital's cases were the most prominent and closely watched against the government over taking a 100% of Frannie (FNMA) and Freddie (FMCC) profits. They have lost their legal challenge to a change that the government made after the 2008 bailouts of Fannie and Freddie to send all of the firm's profits to the Treasury. Currently the government faces about 20 federal legal challenges brought by investors that have kept investors from participating in Fannie and Freddie's post-bailout profits. After a federal judge in the U.S. District Court for the District of Columbia dismissed Fairholme Fund's (Trades, Portfolio) and Perry Capital cases share for Fannie and Freddia including preferred shares fell between 30% to 50% on Wednesday, October 1, 2014.

    Judge dismisses top fund managers' cases


  • Tepper: Stocks Interesting, Junk Bonds at Fair Value

  • Fairholme Fund Second Quarter 2014 Shareholder Letter

    To the Shareholders and the Directors of The Fairholme Fund (Trades, Portfolio):

    The Fairholme Fund (Trades, Portfolio) (the “Fund” or “FAIRX” or “Fairholme”) gained 8.72% versus 7.14% for the S&P 500 Index (the “S&P 500”) for the six-month period that ended June 30, 2014. The following table compares the Fund’s unaudited performance (after expenses) with that of the S&P 500, with dividends and distributions reinvested, for various periods ending June 30, 2014.  

  • A Look at the Real Estate Companies Held by the Most Gurus

    Using the GuruFocus Aggregated Portfolio Screener you can filter results to see what companies maintain the highest amount of guru ownership. By using this screener, we filtered down to see real estate-focused companies which are held by the most gurus. The following five real estate companies are held by the largest number of gurus during the past quarter.

    Jones Lang LaSalle (JLL)


  • A Profile of Value Investing Star Bruce Berkowitz

    Bruce Berkowitz (Trades, Portfolio) doesn’t worry about going against the flow — at least not in the short term. He is a concentrated value investor who bets on only a handful of stocks, so it comes with the territory.

    “With the type of value investing I do, you look very wrong until you’re right,” asserts Berkowitz, founder and chief investment officer of Fairholme Capital Management in Miami. He emphasizes that his investing success stems from the very low price he is willing to pay for a given security. That gives him the greatest chance of making money in the long run, but it also means he’s often buying in the middle of a financial maelstrom (get more on Berkowitz’s value approach in “3 Steps to Successful Investing”).


  • Carl Icahn Buys Fannie Mae, Freddie Mac from Bruce Berkowitz

    In the pattern of Bruce Berkowitz (Trades, Portfolio), Bill Ackman (Trades, Portfolio) and Richard Perry (Trades, Portfolio), corporate activist Carl Icahn (Trades, Portfolio) has purchased shares of Fannie Mae (FNMA) and Freddie Mac (FMCC), according to court documents released today. Three of Icahn’s funds in March purchased the shares from the Fairholme Fund (Trades, Portfolio) (FAIRX), which is owned by Bruce Berkowitz (Trades, Portfolio).

    The Fairholme Fund (Trades, Portfolio) sold a total of 6,828,000 shares of Fannie Mae common stock to Icahn on March 11, at a price of $4.03 per share. It also sold 5,742,000 shares of Freddie Mac common stocks on the same date at $4.04 per share.  

  • IZEA Inc. – An Idea Borrowed from the Portfolio of a Top Small-Cap Investor

    I’m a Warren Buffett devotee.

    As a big Buffett fan the following statement the great investor made to Businessweek in 1999 was forever burned into my memory:  

  • The Four Most Common Attributes of Investment Managers That Outperform Their Benchmarks

    Benjamin Graham wrote in his book "The Intelligent Investor," “Investment is most intelligent when it is most businesslike. To achieve satisfactory results is easier than most people realize; to achieve superior results is harder than it looks.”

    Mr. Graham’s insightful prose is supported by the evidence that in the U.S., index funds, the most common being the S&P 500 Index, have outperformed the majority of active investment managers in large part due to lower management fees and lower portfolio turnover.1 Dalbar Inc., a market research company, found that during the 20 years from 1984 to 2004, the average stock fund investor earned returns of only 3.7% per year, while the S&P 500 returned 13.2%. On an inflation adjusted return, the average equity fund investor earned $13,835 on a $100,000 investment made in 1985, while the inflation adjusted return of the S&P 500 would have been $591,337 or 43 times greater.2 An analysis of the equity funds returns of the 15 biggest asset management companies worldwide from 2004 to 2009 showed that about 80% of the actively managed funds for US, European and Asian equities have returned below their respective benchmarks.3  

  • OSH Trades by Lampert and Gurus - Can Orchard Bear Fruit?

    In the world of garden tools, paint and outdoor furniture — where we shop for price — can Orchard Supply Hardware (OSH) compete with retail giants for top-of-mind among potential customers and flourish in California’s neighborhoods as the go-to place for home improvement? Only the Gurus know the answer, maybe. Meanwhile, California-centric Orchard Supply Hardware faces tough competition in the home improvement and garden market, selling against The Home Depot, Ace Hardware, Costco, Wal-Mart, Target, TrueValue and Lowe’s.

    Here’s a look at what Lampert and other investor Gurus have been doing with Orchard Supply Hardware (OSH), down 48% year to date.  

  • Protecting Yourself Against Fear

    When I looked today at Hewlett Packard’s (HPQ) three-month, 40% run, I became physically ill. Then, remembering that I had only myself to blame, I punched myself in the leg for good measure. Why, you ask? Because three months ago I sold HP near its lowest point in 15 years. It was not the size of the mistake that frustrated me – it was a small position – but that I succumbed to the fear and made a rare emotion-based sell decision.

    Like nearly all of us here at GuruFocus, I consider myself a value investor. And as a value investor, I pride myself on my ability to withstand pain and to make cold, calculated decisions based on rational analysis. But over the course of 24 hours in November 2012, I was my own worst enemy, and I ignored Benjamin Graham’s timeless advice, “Be greedy when others are fearful.” I sold HP when the whole world was pessimistic.  

  • What Does It Take to Be a Guru?

    What annual return do you need to achieve to be considered a guru? Over the last 15 years, you were lucky to make 8% to 9% a year in stocks. And since today’s stock prices aren’t any lower than they were 15 years ago – the same is true of the future. If you can make 8% to 9% a year over 15 years, you’re worthy of guru consideration.

    GuruFocus has its own methods for deciding who is and isn’t a guru. I’m not going to talk about that. I’m just going to talk about what is and isn’t a great investment performance.  

  • Bruce Berkowitz Adds to Wells Fargo, Reduces CIT Group and Jefferies Group

    As of the quarter ending Sept. 30, Bruce Berkowitz, founder of Fairholme Capital Management, has reported three updates to his portfolio, which include an increase in his stake of Wells Fargo (WFC) and stake reductions in CIT Group (CIT) and Jefferies Group (JEF).

    Berkowitz’s investment philosophy targets undervalued stocks that have exceptional management, continuously generating free cash and a cheap price, especially compared to the stock’s intrinsic value.  

  • Fairholme Fund Buys Orchard Supply, Sells Berkshire Hathaway Inc., Cit Group Inc.

    Fairholme Fund just reported its second quarter portfolio. The fund did not trade much during the second quarter. It added slightly to Orchard Supply, and sold Berkshire Hathaway and CIT group. The fund had $7 billion under management as of May 31, which is a drop of more than 60% since 15 months ago.

    Bruce Berkowitz is still confident and concentrated most of his bet on positions like AIG, Sears, and Bank of America. The fund gained 24.7% versus 9.5% for S&P 500 in the first 6 months. He wrote:  

  • Value Is Not Enough

    Bruce Berkowitz, the manager of the Fairholme Fund, recently posted an investor presentation discussing short term volatility and its impact on long term performance (if anybody knows about volatility, its Fairholme Fund investors who have stuck with Berkowitz over the past 18 months). In that slide deck, Mr. Berkowitz quotes something Seth Klarman said in April of 2011:

    “Value… is not enough. Buying low is a start… but you need the patience, discipline and grit to buy lower, and still lower, if the opportunity presents itself, shutting out the extraneous noise coming from within the market and over the airwaves.”  

  • Career Risk and Investment Opportunity

    In May of 1998, Adam Smith, author of the book “The Money Game,” interviewed Warren Buffett (link here). During that discussion, Mr. Smith asked Buffett one question that particularly caught my attention: Why do smart people do dumb things?

    “That's the big question. Why do they do it in investing? Why do they do it in managing businesses? Because you have all these smart people out there. The money doesn't go to the people with the highest I.Q. There would be a very poor correlation between I.Q. and investing and results. And you say to yourself why does somebody with a 500-horsepower motor only get 100-horsepower out of it? And I would say that if you look at the intellect as being the horsepower that's available, but you look at the output as reflecting the efficiency of that motor, it is rationality that causes the capacity to be translated in output.  

  • Fairholme Fund Buys Jefferies, Bank of America; Sells Others

    The long awaited Q3 portfolio of Fairholme Fund is out. Apparently Bruce Berkowitz was under pressure for redemptions. He has sold most of his non-core positions. He sold financials like Goldman Sachs (GS) and Morgan Stanley (MS). But he did buy into a new position – again financial – Jefferies (JEF). These are some observations:

    1. As of Aug. 31, Fairholme has about $10.9 billion under management. Due to the market decline in September, and probably further redemptions, the fund shrank to $8.9 billion in September.  

  • Stock Market Pitching a Fat One Down the Middle with American Bank Stock Prices?

    My gut tells me that we have a big investment opportunity today in American banks. The problem is that my brain tells me that there is no way I have the expertise to figure out exactly what is on the balance sheet of these entities.

    I’ve never been convinced that people inside banks are fully aware of the real risk that lies in their assets. I mean how many loans get underwritten by branches that are supervised by some guy who will never even meet the executives who run the bank? A bank is only as good as its internal controls on its underwriting standards. And internal controls are only as good as the people using them. And we all know what people are capable of. These are huge institutions that rely on the effectiveness of their systems. That frightens me.  

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