|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Bruce Berkowitz’s Big Bet on AIG Starting to Pay Off
Posted by: CanadianValue (IP Logged)
Date: September 18, 2012 02:42PM
Manager Bruce Berkowitz has not made many changes to the Fairholme Fund in the last year. It continues to be heavily concentrated in several large positions, including American International Group (AIG) and Sears Holdings, which account for 38% and 11% of the fund, respectively (as of June 30, 2012). Bank of America (BAC) and General Growth Properties (GGP) account for another 9% and 7%, respectively. Most of these stocks suffered severe declines in 2011, causing the fund to significantly underperform the market and its peers. But those same companies have also caused the fund's significant outperformance so far in 2012. Fairholme has gained 30.1% versus 13.5% for the S&P 500 through August. We recently spoke with Berkowitz to get an update on the fund's large bets on certain financial companies and real estate. (The real estate bet covers multiple holdings, including General Growth Properties, Sears and The St. Joe Company.)
Referring generally to the broad portfolio, “We've had two years of improving businesses,” Berkowitz tells us, “with most companies improving book values.” Despite the fund's impressive performance this year, he believes the holdings are still selling at very attractive discounts to their respective liquidation values and so he is “waiting right now for others to agree.” While he says that his companies' share prices had a horrible year in 2011, “If you look at the fundamental business statistics of our companies, they improved dramatically,” he tells us.
AIG, the fund's largest holding, is a good example of this. In 2011, AIG was a major detractor from the fund's performance, as the stock declined nearly 60%. However, for this year through August, this stock has gained nearly 50%. Despite the massive stock price volatility, the company's tangible book value grew more than 30% year-over-year (as of 6/30/12) and Berkowitz notes that all of AIG's businesses are making money.
Link to entire article which includes updated comments from Berkowitz:
Guru Discussed: Bruce Berkowitz: Current Portfolio, Stock Picks
Stocks Discussed: AIG, BAC, SHLD,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.