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

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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:

Our best idea remains AIG (AIG) common (35% of the Fund) with a reported book value of $57 per share. There are few occasions when systemically important franchises sell for half of book value and are profitable. This is one of those times. AIG warrants held by the Fund (another 3% of the Fund) provide the right to 21+ million shares at $45, or maybe more shares at lower strike prices for the next 34 quarters if dividends above $0.675 per trailing 12-month period are paid.

Bank of America (BAC) is the Fund's next largest financial holding (9% of the Fund) affected by the great housing price collapse. The company's reported book value is over $20 per share. We believe that America's bank is returning to its retail roots (think of Wells Fargo) with a $1 trillion deposit franchise and that bank profits will skyrocket as legacy real estate loans burn-off.

Fairholme Fund buys Orchard Supply Hardware Stores Corp, sells Berkshire Hathaway Inc., Cit Group Inc. during the 3-months ended 05/31/2012, according to the most recent filings of his investment company, Fairholme Fund. As of 05/31/2012, Fairholme Fund owns 15 stocks with a total value of $7.5 billion. These are the details of the buys and sells.

This is the sector weightings of his portfolio:

Financials 71.4%
Warrants 27.5%
Industrials 0.9%


These are the top 5 holdings of Fairholme Fund

  1. American International Group, Inc. (AIG) - 81,327,425 shares, 37.8% of the total portfolio. Shares reduced by 3.33%
  2. Sears Holdings Corporation (SHLD) - 14,212,673 shares, 11.2% of the total portfolio.
  3. (AAIGF) - 190,751,000 shares, 9.9% of the total portfolio. Shares reduced by 36.88%
  4. Bank Of America Corp (BAC) - 81,607,015 shares, 9.6% of the total portfolio.
  5. CIT Group Inc. (CIT) - 13,597,029 shares, 7.4% of the total portfolio. Shares reduced by 16.88%


Sold Out: Berkshire Hathaway Inc. (BRK.A)

Fairholme Fund sold out his holdings in Berkshire Hathaway Inc.. His sale prices were between $117434 and $123555, with an estimated average price of $120707. Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $212.12 billion; its shares were traded at around $127789 with a P/E ratio of 16.1 and P/S ratio of 1.9. Berkshire Hathaway Inc. had an annual average earnings growth of 17.5% over the past 10 years.

Added: Orchard Supply Hardware Stores Corp (OSH)

Fairholme Fund added to his holdings in Orchard Supply Hardware Stores Corp by 0%. His purchase prices were between $17.23 and $26, with an estimated average price of $20.95. The impact to his portfolio due to this purchase was 0.16%. His holdings were 605,293 shares as of 05/31/2012. Orchard Supply Hardware Stores Corporation operates full-service hardware stores focused on homeowners with repair, maintenance and improvement needs in California. Orchard Supply Hardware Stores Corp has a market cap of $75 million; its shares were traded at around $15.72 with and P/S ratio of 0.1.

Reduced: Cit Group Inc. (CIT)

Fairholme Fund reduced to his holdings in Cit Group Inc. by 16.88%. His sale prices were between $33.81 and $43.19, with an estimated average price of $38.94. The impact to his portfolio due to this sale was -1.5%. Fairholme Fund still held 13,597,029 shares as of 05/31/2012. CIT Group Inc. is a bank holding company that provides financing and leasing capital for commercial companies throughout the world. Cit Group Inc. has a market cap of $7.54 billion; its shares were traded at around $37.99 with and P/S ratio of 1.6.

Here is the complete portfolio of Fairholme Fund. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Fairholme Fund.

Rating: 3.6/5 (7 votes)

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