As we stated in this article, In our opinion, Bruce Berkowitz at least matches Warren Buffett in terms of respectful attitude towards investors and he is as close as you can get if you are looking for a manager managing your money in Warren Buffett’s style. Year-to-date, Bruce Berkowitz’s mutual fund – Fairholme Fund is up more than 16%, beating the S&P 500 by a large margin. We are going to review the contributors and draggers in the near future. But first, let’s looking at an interesting phenomena: Bruce Berkowtiz also invests in Highly Predictable companies.
Among the 33 stocks that Bruce Berkowitz held at the end of 1Q09, two of them are what we call Highly Predictable Companies. They are General Dynamics Corp. (GD, Financial) and UnitedHealth Group Inc. (UNH, Financial). Both are under some kind of certainty because of the current administration. For General Dynamics, the concern is whether the Democratic government will keep the military spending increases of the previous government. For UnitedHealth, of course, is the on-going talk on health care reform. Bruce Berkowitz does not seem to be deterred by these concerns:
General Dynamics Corp. (GD)
General Dynamics Corp.'s is a military contractor. Its has four primary businesses, each focusing on shipbuilding and marine systems, business aviation, information systems, and land and amphibious combat systems. General Dynamics Corp. has a market cap of $21.35 billion; its shares were traded at around $55.46 with a P/E ratio of 8.73 and P/S ratio of 0.73. The dividend yield of General Dynamics Corp. stocks is 2.74%. General Dynamics Corp. had an annual average earning growth of 13.9% over the past 10 years. GuruFocus rated General Dynamics Corp. the business predictability rank of 5-star.
Bruce Berkowitz has bought 2,278,100 of GD in 4Q08 and he was seen selling 200,000 shares during 1Q09, assuming selling something cheap to buy something cheaper. His holding still accounts for 1.57% of his $5.52 billion equity portfolio.
UnitedHealth Group Inc. (UNH)
UnitedHealth Group Inc. offers health care coverage and related services to people. UnitedHealth Group Inc. has a market cap of $29.46 billion; its shares were traded at around $24.77 with a P/E ratio of 8.28 and P/S ratio of 0.36. The dividend yield of UnitedHealth Group Inc. stocks is 0.12%. UnitedHealth Group Inc. had an annual average earning growth of 30.4% over the past 10 years. GuruFocus rated UnitedHealth Group Inc. the business predictability rank of 5-star.
Berkowitz bought 16.9 million shares of UNH in 2Q08, he upped it to 20.7 million shares in 3Q08, but then we started to see him selling. He has sold down to 13.2 million shares as of 1Q09. Still, his holdings account for 5% of his equity position as of 1Q09.
Afterthoughts
Earning a 5-star in business predictability is no small trait. There are almost 10,000 stocks traded in the US stock markets, in our ranking that described in this article, only less than 80 (less than 0.8%)company qualifies for the very exclusive club. Yet, among the 41 stocks that Berkshire Hathaway owns, five (over 12%) of them are 5-star company. In that sense, our Business Predictability ranking system improved the chance of finding a Berkshire Hathaway stock by more than 150 times. And among the 31 stocks Bruce Berkowitz holds, 2 of them are 5-star. Do you think it is a coincidence? GuruFocus does not think so.
GuruFocus has started publishing a news letter based on our Buffett-Munger stock screener. Starting from June 2009, each month, we screens, research and recommend on two stocks. The first issue is available through this link. The news letter is free for the Premium Members.
Among the 33 stocks that Bruce Berkowitz held at the end of 1Q09, two of them are what we call Highly Predictable Companies. They are General Dynamics Corp. (GD, Financial) and UnitedHealth Group Inc. (UNH, Financial). Both are under some kind of certainty because of the current administration. For General Dynamics, the concern is whether the Democratic government will keep the military spending increases of the previous government. For UnitedHealth, of course, is the on-going talk on health care reform. Bruce Berkowitz does not seem to be deterred by these concerns:
General Dynamics Corp. (GD)
General Dynamics Corp.'s is a military contractor. Its has four primary businesses, each focusing on shipbuilding and marine systems, business aviation, information systems, and land and amphibious combat systems. General Dynamics Corp. has a market cap of $21.35 billion; its shares were traded at around $55.46 with a P/E ratio of 8.73 and P/S ratio of 0.73. The dividend yield of General Dynamics Corp. stocks is 2.74%. General Dynamics Corp. had an annual average earning growth of 13.9% over the past 10 years. GuruFocus rated General Dynamics Corp. the business predictability rank of 5-star.
Bruce Berkowitz has bought 2,278,100 of GD in 4Q08 and he was seen selling 200,000 shares during 1Q09, assuming selling something cheap to buy something cheaper. His holding still accounts for 1.57% of his $5.52 billion equity portfolio.
UnitedHealth Group Inc. (UNH)
UnitedHealth Group Inc. offers health care coverage and related services to people. UnitedHealth Group Inc. has a market cap of $29.46 billion; its shares were traded at around $24.77 with a P/E ratio of 8.28 and P/S ratio of 0.36. The dividend yield of UnitedHealth Group Inc. stocks is 0.12%. UnitedHealth Group Inc. had an annual average earning growth of 30.4% over the past 10 years. GuruFocus rated UnitedHealth Group Inc. the business predictability rank of 5-star.
Berkowitz bought 16.9 million shares of UNH in 2Q08, he upped it to 20.7 million shares in 3Q08, but then we started to see him selling. He has sold down to 13.2 million shares as of 1Q09. Still, his holdings account for 5% of his equity position as of 1Q09.
Afterthoughts
Earning a 5-star in business predictability is no small trait. There are almost 10,000 stocks traded in the US stock markets, in our ranking that described in this article, only less than 80 (less than 0.8%)company qualifies for the very exclusive club. Yet, among the 41 stocks that Berkshire Hathaway owns, five (over 12%) of them are 5-star company. In that sense, our Business Predictability ranking system improved the chance of finding a Berkshire Hathaway stock by more than 150 times. And among the 31 stocks Bruce Berkowitz holds, 2 of them are 5-star. Do you think it is a coincidence? GuruFocus does not think so.
GuruFocus has started publishing a news letter based on our Buffett-Munger stock screener. Starting from June 2009, each month, we screens, research and recommend on two stocks. The first issue is available through this link. The news letter is free for the Premium Members.
