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Investing Guru of the Year 2012 Is Bruce Berkowitz

December 19, 2012 | About:
Holly LaFon

Holly LaFon

277 followers
In a landslide vote by readers, Bruce Berkowitz, the leader of the Fairholme Fund, has been named GuruFocus’ Guru of the Year for 2012. Berkowitz received 46.7% of votes, followed by David Tepper who received 17.8% and Prem Watsa who received 15.1%.

Founded in 1999 and based in Miami, Fla., The Fairholme Fund has $7.9 billion in assets under management and has produced a 10.32% annualized 10-year return.

Berkowitz’s recognition is no doubt due to his fund’s come back this year. After losing 32.42% in its worst year of performance in 2011, the fund has rebounded 36.8% year to date. The volatility was due to massive, early bets on some of the companies left in the worst shape by the financial crisis, such as AIG (AIG), Bank of America (BAC) and Citigroup (C). Most of these stocks began to rebound this year.

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Berkowitz spent a lot of time last year explaining his value-based reasons for investing in the ramshackle financial companies. Their balance sheets appeared so difficult to analyze and macro trends seemed so against them that most investors steered clear.

However, Berkowitz believed in the long-term vitality of the American financial sector and found the fundamentals and rock-bottom valuations appealing.

The investor, whose fund’s motto is “Ignore the crowd,” gave an interview with his company as redemptions were mounting in February 2012 in which he said, “It all looks great. The rest of the investment world has to start to be convinced that these are valuable franchises that are going to make money once they clear up the sort of one-time fixable problems they had from sort of the irrational exuberance of home ownership.”

During the down period, GuruFocus published an article, “Though It Hurts, Bruce Berkowitz Is No Bill Miller,” contrasting Berkowitz’s approach with others who have taken big bets and faced permanent, career-ending loss of capital.

Berkowitz also posted several case studies explaining his detailed theses on two of his prominent holdings, Bank of America and AIG.

As the financial sector began to heal in 2012, it was reflected in the price of stocks – the Financial Select Sector SPDR (XLF) increased 31% over the past year, more than doubling from its 2009 lows. It also catapulted Berkowitz’s fund to the top-performing percentile of mutual funds this year.

See financial Guru of the Year 2012 Bruce Berkowitz’s stock portfolio here. Also check out the undervalued stocks, top growth companies and high yield stocks of Warren Buffett.


Rating: 3.4/5 (18 votes)

Comments

ranjitsudan
Ranjitsudan - 2 years ago
Not sure if he has made any money for last 2 years... he was too early in financials. He was buying BAC, C in 2010-11. They still haven't reached those level yet. With all the outlfows in 2012, he was quite restricted in buying these stocks of their lows. My understanding was that he got hungry too early, ignored macro concerns coming out of europe and paid the price for that.
swnyc2
Swnyc2 - 2 years ago
Yep... down 32.4% and then up 36.8% means he is still down more than 7% over the last two years. While his performance may be good this past year, it is truly awful if you look at it over a two year period. During that time the S&P500 has gained more than 15% excluding dividends!.
vgm
Vgm - 2 years ago
Berkowitz was certainly early with his financials - he says he suffers from premature accumulation - and may not have produced much in the way of yield over the past 2 years, but his long-term record remains good, and he is probably en route to big gains over the next 3-5 years. He always said it would not be quick. I think we should salute his courage and conviction based on the belief in his own analyses and, of course, his ability to "ignore the crowd" who were constantly hammering him.

"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right." Ben Graham

Bravo Bruce!
vuasu
Vuasu - 2 years ago
Bruce was ahead of the curve; just look at his picks.
mocheng
Mocheng premium member - 2 years ago
10 years of little over 10%, and you voted him top guru? David Tepper deserve this award. Look at his record, much better than Bruce.
AlbertaSunwapta
AlbertaSunwapta - 2 years ago
^ LOL. Most voters are short-term investors with a short term perspectives maybe?
TelloBCP
TelloBCP - 2 years ago
Mocheng- We should only look at the stock performance in 2012 not the record in last 10 years. Bruce clearly has won this. David Tepper is one of my favorite investors but I think Bruce deserved this award this year.

Stephen Neumeier
Stephen Neumeier premium member - 2 years ago
Disturbing article in Barron's last year.
paulwitt
Paulwitt - 2 years ago


NeumeierS,

What is the "Disturbing article in Barron's last year" about?


Cogitator99
Cogitator99 - 1 year ago
Mocheng - you should compare that annualized 10% against what the SPX did over the same period. I suspect the differential is significant.

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