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Berkowitz Talks About the Uniqueness of the Fairholme Fund

July 01, 2011
Bruce Berkowitz talks about how "Ignoring the crowd" means avoiding stocks everyone loves and are over priced, and getting away from "group think" which dummies down to the lowest common denominator. He also talks about how he is adapting the fund to keep its edge as it grows larger.

The video is below:

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Rating: 4.0/5 (18 votes)


Greg Speicher
Greg Speicher - 4 years ago
I think Berkowitz continues to exhibit several characteristics which have high signal value in discerning whether he can outperform the market going forward.

1. He has built a great track record following a consistent, transparent process.

2. He runs (and has run) a concentrated portfolio which shows he is willing to back up his convictions with large bets. No closet index here.

3. He stays within a well-defined circle of competence.

4. He eats his own cooking. I do not know precisely how much he has invested in the fund (or if it is disclosed), but he represents it as being substantial. (This may be the most important factor.)

5. Although he has his own "Charlie Munger", Charles Fernadez, Fairholme is clearly the expression of Bruce Berkowitz. There is no investing by committee or reliance on unproven analysts for ideas. This is how Buffett has built his record and I believe the best approach. Great results are rarely achieved through consensus.

6. The only warning light is the size of the fund. Berkowitz contends that it is not yet a problem. Time will tell, and each investor who is interested in Fairholme will need to grapple with this issue.

7. As a mutual fund it still has a poor structure for taxable accounts but that is the nature of the beast.

8. As a source of ideas, Berkowitz is still worth paying attention to.


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