After the Fairholme Fund got slammed in 2011 for its disappointing performance, Berkowitz’s reputation bounced back this year, as he produced an average rate of return of 6.5 percent in the last 12 months, according to the GuruFocus Score Board.
In a Fortune interview in November with reporter Scott Cendrowski, Berkowitz addressed people’s criticisms about his previous year performance:
“I think it's fair. What's not fair is to believe that a manager or a businessperson is in such control of companies that they can control any one-year period or two-year period. I've not seen it done. There's a reason Warren Buffett judges Berkshire Hathaway's (BRKA) book value against the S&P 500. He doesn't use Berkshire's stock price. My question to you is, Can someone like me or anyone else avoid a 2011?” (Read the rest of the article at The Return of a Star Fund Manager)
Berkowitz’s 20-stock portfolio is worth almost $7 billion. His top holdings are American International Group Inc. (AIG) which is 40 percent of his portfolio, Sears Holdings Corp. (SHLD) which is 13.4 percent of his portfolio and Bank of America Corp. (BAC) which is 12.9 percent of his portfolio.
As his top holdings, all three have consequently performed at topnotch levels, achieving the highest change in market values in 52 weeks.
Bank of America has topped all his holdings as it appreciated 91.55 percent year to date. It is trading at $10.57, and its stock is up 0.05 percent today.
BAC data by GuruFocus.com
In second place in Berkowitz’s portfolio would be American International Group Inc., which rose 50 percent in market value, year to date. It traded its highest in October around $37, and its current trade price now is $33.94.
Berkowitz referred to AIG in his second quarter shareholder letter as one his best ideas.
AIG data by GuruFocus.com
Sears Holdings does not trail too far back from AIG, surging in market value by 48 percent year to date.
In the second quarter, Sears only represented 11 percent of Berkowitz’s portfolio, compared to today’s 13. In his shareholder letter, Berkowitz stated:
“Sears Holdings is one of the largest corporate real estate organizations in the world, with a portfolio of retail locations that is second to none. Generally Accepted Accounting Principles mandate valuing their real estate at the lower of cost or market. GAAP would force the Dutch settlers to value Manhattan today at the 1626 purchase price of $23.70. The company’s reported book value of $43 understates real values.”
Sears is priced at $42.28. It traded its highest in March at $82.
SHLD data by GuruFocus.com
Though Berkowitz’s Wells Fargo & Co. (WFC) holding represents only 0.19 percent of his portfolio, the stock’s market value rose 24.75 percent year to date.
Trading at $33, the stock was at its highest in September at $36. Berkowitz owns 1.3 million shares of Wells Fargo.
WFC data by GuruFocus.com
See Bruce Berkowitz’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Bruce Berkowitz.
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