GuruFocus readers are no stranger to Berkowitz and his fund. We repeatedly stated that he is as close as you can get for a Warren Buffett disciple. He actually has a few advantage over the Buffett: for one, he is so much younger and will be around for a couple more years (or decades); his fund is still very manageable with less than $10 billion AUM.
Here is his performance over the past nine years:
Performance of Fairholme Fund
|Year||Return (%)||S&P500 (%)||Excess Gain (%)|
We know he likes to concentrate his investments in a few companies he knows really well. As of June 30, 2009, he has 33 stock names in his portfolio. Warren Buffett has 41…but as some may contest, those are really not his ideas. Some are Lou Simpson’s doing. On the other hand, Buffett has some 70 operating subsidiaries to attend. I am sure the people running the subsidiaries are close to saints, but still. Enough about Buffett, let’s focus on Berkowitz.
You mean 41% on Health Care sector? Yes, 41% on exact the sector that has been pounded from the left and right. A sector that, based on the level of effort from the government, has committed more crime than the notorious financial sector.
We know the market is not perfectly efficient. It always overreacts on the short term. It might just did in the Health Care. So thought Bruce Berkowitz, why else he put 41% of his asset into one sector? His performance speaks for him; he is smarter than the market, that is smarter than the rest of us combined, which defines the market.
Here is what he has to say about Heath Care Sector earlier this year in Morningstar conference:
Here are the stocks he owns in Heath CareSector:
Pfizer Inc is a research-based global pharmaceutical company. Pfizer Inc has a market cap of $110.96 billion; its shares were traded at around $16.4 with a P/E ratio of 7.18 and P/S ratio of 2.3. The dividend yield of Pfizer Inc stocks is 3.89%. Pfizer Inc had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Pfizer Inc the business predictability rank of 2.5-star.
Berkowitz owns 87,182,848 shares as of 06/30/2009, which accounts for 18.39% of the $7.11 billion portfolio of Fairholme Capital Management.
WellPoint Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. WellPoint Inc. is an independent licensee of the Blue Cross and Blue Shield Association and serves its members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado Connecticut Georgia Indiana Kentucky Maine Missouri Nevada New Hampshire Ohio Virginia (excluding the Northern Virginia suburbs of Washington D.C.) Wisconsin; and through HealthLink and UniCare. Wellpoint Inc. has a market cap of $23.83 billion; its shares were traded at around $49.6 with a P/E ratio of 8.4 and P/S ratio of 0.39. Wellpoint Inc. had an annual average earning growth of 20.8% over the past 5 years.
Berkowitz owns 8,710,710 shares as of 06/30/2009, which accounts for 6.23% of the $7.11 billion portfolio of Fairholme Capital Management.
Forest Laboratories Inc. (FRX)
Forest Laboratories Inc. and its subsidiaries develop manufacture and sell both branded and generic forms of ethical drug products which require a physician's prescription as well as non-prescription pharmaceutical products sold over-the-counter. Forest's most important United States products consist of branded ethical drug specialties marketed directly or to physicians by the company's Forest Pharmaceuticals Forest Therapeutics and Forest Specialty Sales sales forces. Forest Laboratories Inc. has a market cap of $8.64 billion; its shares were traded at around $28.51 with a P/E ratio of 8.28 and P/S ratio of 2.2. Forest Laboratories Inc. had an annual average earning growth of 30.7% over the past 10 years. GuruFocus rated Forest Laboratories Inc. the business predictability rank of 2.5-star.
Berkowitz owns 18,147,244 shares as of 06/30/2009, which accounts for 6.41% of the $7.11 billion portfolio of Fairholme Capital Management.
Humana Inc. (HUM)
Humana Inc. is a health services company that facilitates the delivery of health care services through networks of providers to its medical members. The company's products are marketed primarily through health maintenance organizations and preferred provider organizations that encourage or require the use of contracted providers. The company also offers various specialty products to employers including dental group life and workers' compensation and administrative services to those who self-insure their employee health plans. Humana Inc. has a market cap of $6.48 billion; its shares were traded at around $37.6 with a P/E ratio of 7.02 and P/S ratio of 0.22. Humana Inc. had an annual average earning growth of 18.7% over the past 10 years. GuruFocus rated Humana Inc. the business predictability rank of 2-star.
Berkowitz owns 9,537,400 shares as of 06/30/2009, an increase of 41.14% from the previous quarter. This position accounts for 4.33% of the $7.11 billion portfolio of Fairholme Capital Management.
UnitedHealth Group (UNH)
UnitedHealth Group Inc. offers health care coverage and related services to help people achieve improved health and well-being through all stages of life. The company's products and services reflect a number of core capabilities including medical information management health benefit administration care coordination risk assessment and pricing health benefit design and provider contracting. With these capabilities it is able to provide comprehensive health care management services through organized health systems and insurance products. Unitedhealth Group Inc. has a market cap of $30.26 billion; its shares were traded at around $25.34 with a P/E ratio of 8.53 and P/S ratio of 0.37. 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 owns 9,914,633 shares as of 06/30/2009, a decrease of 24.65% of from the previous quarter. This position accounts for 3.48% of the $7.11 billion portfolio of Fairholme Capital Management.
WellCare Health Plans Inc. provides managed care services targeted exclusively to government-sponsored healthcare programs focusing on Medicaid and Medicare. WellCare provides high-quality affordable healthcare services to members in Florida New York Connecticut Illinois and Indiana. Wellcare Health Plans Inc. has a market cap of $1.09 billion; its shares were traded at around $24.96 with and P/S ratio of 0.17.
Berkowitz owns 8,399,763 shares as of 06/30/2009, which accounts for 2.18% of the $7.11 billion portfolio of Fairholme Capital Management.
Bristol-Myers Squibb Company (BMY)
Bristol-Myers Squibb Company is a global leader in the research and development of innovative lifesaving and life-enhancing treatments for heart disease; high blood pressure; stroke; diabetes; cancer; HIV/AIDS and other infectious diseases; depression schizophrenia and other mental disorders; pain; and other conditions. Bristolmyers Squibb Company has a market cap of $44.43 billion; its shares were traded at around $22.42 with a P/E ratio of 11.44 and P/S ratio of 2.16. The dividend yield of Bristolmyers Squibb Company stocks is 5.53%.
Berkowitz owns 19,100 shares as of 06/30/2009, a decrease of 51.89% of from the previous quarter. This position accounts for 0.01% of the $7.11 billion portfolio of Fairholme Capital Management.
In the midst of all the noise of the Health Care reforms and other investors escaped the sector, Bruce Berkowitz allocated 41% into the uncertain industry.
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