Fairholme Capital Management is an investment management company that primarily operates under three mutual funds: The Fairholme Fund, the Fairholme Focused Income Fund and the Fairholme Allocation Fund. Launched in 1999, Fairholme Capital Management is headed by Bruce Berkowitz, named both domestic stock fund manager of year in 2009, and of the decade in 2010. Fairholme Capital Management has over $15 billion under management invested between 24 different equities. More detailed information regarding Bruce Berkowitz and his investment philosophies can be found in this article: http://www.gurufocus.com/news.php?id=122358
Fairholme Capital Management’s overall portfolio can be seen in the following two charts. A comparative analysis of both quarters demonstrates the core focus of the portfolio situated in the financial sector. In addition, a position in the oil and gas sector was recently initialized.
The top five holdings of Fairholme Capital Management can be seen in the following table. These five stocks make up approximately 49.17% of the overall portfolio.
New Portfolio Position
1. AT&T (T, Financial)
AT&T is the largest addition to Fairholme’s portfolio. AT&T provides numerous telecommunications services ranging from internet services to comprehensive phone plans for their clients. Recently, they announced plans to acquire T-Mobile, thus solidifying their position in the wireless communication sector. Their shares trade at $30.53, with a market capitalization of $180.48 billion. They have a 5.63% dividend yield along with a P/E ratio of 9.49.
The average price per share paid by Fairholme Capital is estimated at $28.66 in 9,380,700 shares. Since their purchase, the trading value of the stock has increased by 6.5%. Their overall position is reported at $275 million, which comprises 1.75% of the overall portfolio. For the last 10 years, on an annual basis, AT&T has grown its EPS by 3.4%.
GuruFocus rated T with the business predictability rank of 1 star.
2. Verizon (VZ, Financial)
Verizon is the second largest addition to Fairholme’s portfolio. Verizon is currently the largest provider of both wired and wireless communications in the United States. Verizon currently trades at $37.76, with a market capitalization of $105.73 billion. Verizon has a 5.16% dividend yield, and a P/E ratio of 41.94.
Berkowitz purchased Verizon at an estimated average price of $33.20 which is 14% less then Verizon’s current trading price. 7,402,400 shares were purchased for a total net position reported at $264 million which comprises 1.68% of the overall portfolio. For the last 10 years, Verizon has grown its EPS annually by 11.5%.
GuruFocus rated VZ with the business predictability rank of 2.5 stars.
3. Banco Santander (STD, Financial)
Banco Santander is an international bank headquartered in Madrid, Spain. They offer a diverse range of banking services, from retail banking to asset management. Banco Santander currently trades at $12.45 with a market capitalization at $105 billion. They have a dividend yield of 6.56%, and a P/E ratio of 9.14. For the most recent fiscal year, they reported earnings at $1.36 per share.
Fairholme purchased STD at an average price at $11.74, which is 6% less then the current trading price. The aggregate position comprises of 4,741,200 shares for a net value at $50 million.
GuruFocus rated STD with the business predictability rank of 1 star.
4. Royal Dutch Shell (RDS.A, Financial).
Royal Dutch Shell is a oil and gas company that is vertically integrated in its operations. Royal Dutch Shell operates under 3 business units: Upstream, Downstream, and Corporate. Their shares trade at $75.18, with a market capitalization at $236.25 billion. They have a 4.47% dividend yield and a P/E ratio at 11.46.
4,741,200 shares of Royal Dutch Shell were accumulated at an estimated price of $64.3. This overall position valued at $11.6 million has a potential capital gain of 16.8%. For the last 10 years, Royal Dutch Shell has grown its EPS annually by 3.1%.
GuruFocus rated RDS.A with the business predictability rank of 2.5 stars.
Stake Increase
1. American International Group (AIG, Financial)
American International Group is a international insurance and financial services firm with operations spanning over 130 countries. Their shares trade at $34.50, with a market capitalization at $61.94 billion. AIG has a P/E ratio of 2.44, with reported earnings at $14.11 for their fiscal year ending in 2010.
AIG holdings increased by 98% with the purchase of 11,376,486 shares to yield a new net position valued at $2.5 billion. The average estimated price paid per share was $44.93, which represents a 23% capital loss. By large, AIG is the largest holding in Fairholme’s portfolio, comprising 16% of the overall portfolio.
Guru focus rated AIG with the business predictability rank of 1-star.
2. Regions Financial Corporation (RF, Financial)
Regions Financial Corporation is a national banking services firm, offering services to both individuals and large scale clients. Their shares trade at $7.30, with a total market capitalization at $9.18 billion. They reported negative earnings of $.63 per share for their fiscal year ending in 12/31.
Regions holdings were increased by 67% with the purchase of 52,730,800 shares yielding a value at $871 million. Berkowitz purchased Regions at a estimated average price of $6.45 which is a potential capital gain of 13.2%.
GuruFocus rated RF with the business predictability rank of 1-star.
3. Bank of America (BAC, Financial)
Bank of America is a global financial services firm, catering to a diverse range of clients with a even larger range of products. Their shares trade at $13.52, with a market capitalization of $136.84 billion. They reported negative earnings of $.33, and have a .30% dividend yield.
Fairholme Capital increased its overall holding of Bank of America by 32.6% with the purchase of 21,461,500 shares. This overall position is reported at $1.22 billion with purchase price estimated at $12.20. This represents a 10.8% capital gain. Bank of America is the third largest holding of Fairholme’s portfolio, coming in at approximately 7.79% of the aggregate portfolio.
GuruFocus rated BAC with the business predictability rank of 1-star.
Stake Decrease
1. General Growth Properties (GGP, Financial)
General Growth Properties was the second largest holding of Fairholme Capital before 113 million shares were sold to Brookfield Asset Management in a $1.7 billion block transaction. Fairholme Capital now maintains a small position of 600,256 shares in GGP.
GGP at its very core is a real estate trust that owns, develops, and operates major shopping malls across the United States. Their shares trade for $15.07, with a market capitalization of $14.53 billion. They have a dividend yield of 2.65%, with negative earnings reported for their last two fiscal years.
Guru focus rated GGP with the business predictability rank of 1-star.
2. Humana INC (HUM, Financial)
Humana’s net position was reduced by $174 million to a net position of $454,000. This is the second largest reduction in equity in Fairholme’s portfolio.
Humana is a health care services company that provides full-service benefits and wellness solutions for large groups and individuals through their medical centers. Their shares trade for $70.56, with a market capitalization of $11.90 billion. They reported earnings at $6.47 per share, with a P/E ratio of 10.91. On an annual basis, Humana has grown its EPS by 29.3% each year for the last ten years.
GuruFocus rated HUM with the business predictability rank of 4 stars.
3. Wellcare Health Plans Inc. (WCG, Financial)
Fairholme reduced its holdings of Wellcare Health Plan by $62 million from $169 million to $107 million.
Wellcare provides Medicare and Medicaid managed health care plans for its members in Florida, New York, Connecticut, Illinois, and Indiana. Wellcare trades at $43.36 with a market capitalization of $1.84 billion. Wellcare reported negative earnings for its fiscal year ending in 2010, at $-1.28 per share.
4. Winthrop Realty Trust (FUR, Financial)
Winthrop Realty Trust’s overall position was reduced from $44 million to $31 million, a net decline of $13 million.
Winthrop Realty is a Boston-based REIT who primarily utilizes real-estate backed loans, and ownership of several investment properties. Winthrop currently trades at $12.19, with a market capitalization of $391 million. They have a P/E ratio of 14.87, and a dividend yield at 5.33%.
GuruFocus rated FUR with the business predictability rank of 1-star.
Complete Position Close-Out
1. Tal International Group (TAL, Financial)
Tal International Group is an international storage container leasing company. Their shares trade for $36.00, with a market capitalization of $1.20 billion. They offer a 5% dividend yield, and a P/E ratio of 19.20.
Fairholme completely eliminated Tal International’s $35 million position from their portfolio. This position was sold at an average of $28.16, which is 27% less then the current trading price.
For more information pertaining to Bruce Berkowitz, and Fairholme Capital Management, please visit:
http://www.gurufocus.com/ListGuru.php?GuruName=Bruce+Berkowitz
Fairholme Capital Management’s overall portfolio can be seen in the following two charts. A comparative analysis of both quarters demonstrates the core focus of the portfolio situated in the financial sector. In addition, a position in the oil and gas sector was recently initialized.
Overall Portfolio Composition | Q4 | Q3 | %Change |
Financials | 72.50% | 80.30% | -7.80% |
Telecommunications | 3.40% | 0.00% | 3.40% |
Consumer Services | 7.00% | 9.40% | -2.40% |
Health Care | 0.70% | 3.10% | -2.40% |
Consumer Goods | 0.00% | 0.00% | 0.00% |
Industrials | 5.00% | 6.90% | -1.90% |
Basic Materials | 0.00% | 0.00% | 0.00% |
Oil & Gas | 2.60% | 0.00% | 2.60% |
The top five holdings of Fairholme Capital Management can be seen in the following table. These five stocks make up approximately 49.17% of the overall portfolio.
Top Five Holdings | Symbol | Composition% | Shares | Value |
American International Group | AIG | 16.16% | 44,285,986 | 2,551,759,000 |
Bank of America | BAC | 7.79% | 92,139,515 | 1,229,140,000 |
Citigroup | C | 7.11% | 237,137,000 | 1,121,660,000 |
Sears Holding Corporation | SHLD | 6.97% | 14,917,873 | 1,100,190,000 |
Morgan Stanley | MS | 6.65% | 38,582,400 | 1,049,830,000 |
Total Value of Portfolio | 15,786,857,000 |
New Portfolio Position
1. AT&T (T, Financial)
AT&T is the largest addition to Fairholme’s portfolio. AT&T provides numerous telecommunications services ranging from internet services to comprehensive phone plans for their clients. Recently, they announced plans to acquire T-Mobile, thus solidifying their position in the wireless communication sector. Their shares trade at $30.53, with a market capitalization of $180.48 billion. They have a 5.63% dividend yield along with a P/E ratio of 9.49.
The average price per share paid by Fairholme Capital is estimated at $28.66 in 9,380,700 shares. Since their purchase, the trading value of the stock has increased by 6.5%. Their overall position is reported at $275 million, which comprises 1.75% of the overall portfolio. For the last 10 years, on an annual basis, AT&T has grown its EPS by 3.4%.
GuruFocus rated T with the business predictability rank of 1 star.
2. Verizon (VZ, Financial)
Verizon is the second largest addition to Fairholme’s portfolio. Verizon is currently the largest provider of both wired and wireless communications in the United States. Verizon currently trades at $37.76, with a market capitalization of $105.73 billion. Verizon has a 5.16% dividend yield, and a P/E ratio of 41.94.
Berkowitz purchased Verizon at an estimated average price of $33.20 which is 14% less then Verizon’s current trading price. 7,402,400 shares were purchased for a total net position reported at $264 million which comprises 1.68% of the overall portfolio. For the last 10 years, Verizon has grown its EPS annually by 11.5%.
GuruFocus rated VZ with the business predictability rank of 2.5 stars.
3. Banco Santander (STD, Financial)
Banco Santander is an international bank headquartered in Madrid, Spain. They offer a diverse range of banking services, from retail banking to asset management. Banco Santander currently trades at $12.45 with a market capitalization at $105 billion. They have a dividend yield of 6.56%, and a P/E ratio of 9.14. For the most recent fiscal year, they reported earnings at $1.36 per share.
Fairholme purchased STD at an average price at $11.74, which is 6% less then the current trading price. The aggregate position comprises of 4,741,200 shares for a net value at $50 million.
GuruFocus rated STD with the business predictability rank of 1 star.
4. Royal Dutch Shell (RDS.A, Financial).
Royal Dutch Shell is a oil and gas company that is vertically integrated in its operations. Royal Dutch Shell operates under 3 business units: Upstream, Downstream, and Corporate. Their shares trade at $75.18, with a market capitalization at $236.25 billion. They have a 4.47% dividend yield and a P/E ratio at 11.46.
4,741,200 shares of Royal Dutch Shell were accumulated at an estimated price of $64.3. This overall position valued at $11.6 million has a potential capital gain of 16.8%. For the last 10 years, Royal Dutch Shell has grown its EPS annually by 3.1%.
GuruFocus rated RDS.A with the business predictability rank of 2.5 stars.
Stake Increase
1. American International Group (AIG, Financial)
American International Group is a international insurance and financial services firm with operations spanning over 130 countries. Their shares trade at $34.50, with a market capitalization at $61.94 billion. AIG has a P/E ratio of 2.44, with reported earnings at $14.11 for their fiscal year ending in 2010.
AIG holdings increased by 98% with the purchase of 11,376,486 shares to yield a new net position valued at $2.5 billion. The average estimated price paid per share was $44.93, which represents a 23% capital loss. By large, AIG is the largest holding in Fairholme’s portfolio, comprising 16% of the overall portfolio.
Guru focus rated AIG with the business predictability rank of 1-star.
2. Regions Financial Corporation (RF, Financial)
Regions Financial Corporation is a national banking services firm, offering services to both individuals and large scale clients. Their shares trade at $7.30, with a total market capitalization at $9.18 billion. They reported negative earnings of $.63 per share for their fiscal year ending in 12/31.
Regions holdings were increased by 67% with the purchase of 52,730,800 shares yielding a value at $871 million. Berkowitz purchased Regions at a estimated average price of $6.45 which is a potential capital gain of 13.2%.
GuruFocus rated RF with the business predictability rank of 1-star.
3. Bank of America (BAC, Financial)
Bank of America is a global financial services firm, catering to a diverse range of clients with a even larger range of products. Their shares trade at $13.52, with a market capitalization of $136.84 billion. They reported negative earnings of $.33, and have a .30% dividend yield.
Fairholme Capital increased its overall holding of Bank of America by 32.6% with the purchase of 21,461,500 shares. This overall position is reported at $1.22 billion with purchase price estimated at $12.20. This represents a 10.8% capital gain. Bank of America is the third largest holding of Fairholme’s portfolio, coming in at approximately 7.79% of the aggregate portfolio.
GuruFocus rated BAC with the business predictability rank of 1-star.
Stake Decrease
1. General Growth Properties (GGP, Financial)
General Growth Properties was the second largest holding of Fairholme Capital before 113 million shares were sold to Brookfield Asset Management in a $1.7 billion block transaction. Fairholme Capital now maintains a small position of 600,256 shares in GGP.
GGP at its very core is a real estate trust that owns, develops, and operates major shopping malls across the United States. Their shares trade for $15.07, with a market capitalization of $14.53 billion. They have a dividend yield of 2.65%, with negative earnings reported for their last two fiscal years.
Guru focus rated GGP with the business predictability rank of 1-star.
2. Humana INC (HUM, Financial)
Humana’s net position was reduced by $174 million to a net position of $454,000. This is the second largest reduction in equity in Fairholme’s portfolio.
Humana is a health care services company that provides full-service benefits and wellness solutions for large groups and individuals through their medical centers. Their shares trade for $70.56, with a market capitalization of $11.90 billion. They reported earnings at $6.47 per share, with a P/E ratio of 10.91. On an annual basis, Humana has grown its EPS by 29.3% each year for the last ten years.
GuruFocus rated HUM with the business predictability rank of 4 stars.
3. Wellcare Health Plans Inc. (WCG, Financial)
Fairholme reduced its holdings of Wellcare Health Plan by $62 million from $169 million to $107 million.
Wellcare provides Medicare and Medicaid managed health care plans for its members in Florida, New York, Connecticut, Illinois, and Indiana. Wellcare trades at $43.36 with a market capitalization of $1.84 billion. Wellcare reported negative earnings for its fiscal year ending in 2010, at $-1.28 per share.
4. Winthrop Realty Trust (FUR, Financial)
Winthrop Realty Trust’s overall position was reduced from $44 million to $31 million, a net decline of $13 million.
Winthrop Realty is a Boston-based REIT who primarily utilizes real-estate backed loans, and ownership of several investment properties. Winthrop currently trades at $12.19, with a market capitalization of $391 million. They have a P/E ratio of 14.87, and a dividend yield at 5.33%.
GuruFocus rated FUR with the business predictability rank of 1-star.
Complete Position Close-Out
1. Tal International Group (TAL, Financial)
Tal International Group is an international storage container leasing company. Their shares trade for $36.00, with a market capitalization of $1.20 billion. They offer a 5% dividend yield, and a P/E ratio of 19.20.
Fairholme completely eliminated Tal International’s $35 million position from their portfolio. This position was sold at an average of $28.16, which is 27% less then the current trading price.
For more information pertaining to Bruce Berkowitz, and Fairholme Capital Management, please visit:
http://www.gurufocus.com/ListGuru.php?GuruName=Bruce+Berkowitz
