(GuruFocus, January 14, 2010) Bruce Berkowitz, head of the $11.2 billion Fairholme Fund, talks with Bloomberg's Margaret Brennan about his investment strategy. Berkowitz was this month named fund manager of the decade in the U.S. stock-fund category by Chicago-based research firm Morningstar Inc. The Fairholme Fund returned an average of 13 percent over the past 10 years, while the Standard & Poor's 500 Index fell an annual 1 percent.
(Source: Bloomberg)
Berkowitz discussed how he accomplished his success :
1. Ignore the crowd, going toward the distressed areas where many people are running from.
2. Evaluate security based on the cash the business is generating
Going forward, Berkowitz thinks there are still much to do as we just come out of a very distressed period. He likes Healthcare, Real Estate, Retailer, and Financial Services.
Here are Bruce Berkowitz’s low P/E stocks:
Humana Inc. (HUM, Financial) -- P/E = 8.4
Berkowitz owns about 15 million shares of HUM.
Humana, Inc. is a health services company that facilitates the delivery of health care services through networks of providers to its medical members. Humana Inc. has a market cap of $8.16 billion; its shares were traded at around $48.02 with a P/E ratio of 8.4 and P/S ratio of 0.3. 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.
Forest Laboratories Inc. (FRX, Financial) -- P/E = 8.8
Berkowitz owns about 14.9 million shares of 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 Laboratories Inc. has a market cap of $9.46 billion; its shares were traded at around $31.35 with a P/E ratio of 8.8 and P/S ratio of 2.4. 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.
Pfizer Inc (PFE, Financial) -- P/E = 8.9
Berkowitz owns 73 million shares of Pfizer.
Pfizer Inc is a research-based, global pharmaceutical company. Pfizer Inc has a market cap of $156.39 billion; its shares were traded at around $19.38 with a P/E ratio of 8.9 and P/S ratio of 3.2. The dividend yield of Pfizer Inc stocks is 3.3%. Pfizer Inc had an annual average earning growth of 11% over the past 10 years.
Cardinal Health Inc. (CAH, Financial) -- P/E = 9.9
Berkowitz bought 1.5 million shares during 3Q09.
Cardinal Health, Inc. is one of the leading providers of products and services to healthcare providers and manufacturers to help them improve the efficiency and quality of healthcare. Cardinal Health Inc. has a market cap of $11.83 billion; its shares were traded at around $32.62 with a P/E ratio of 9.9 and P/S ratio of 0.1. The dividend yield of Cardinal Health Inc. stocks is 2.2%. Cardinal Health Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Cardinal Health Inc. the business predictability rank of 3-star.
WellPoint Inc. (WLP, Financial) -- P/E = 10.7
Berkowitz owns 6.6 million shares of WLP.
WellPoint, Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. Wellpoint Inc. has a market cap of $30.35 billion; its shares were traded at around $66.22 with a P/E ratio of 10.7 and P/S ratio of 0.5. Wellpoint Inc. had an annual average earning growth of 20.8% over the past 5 years.
Northrop Grumman Corp. (NOC, Financial) -- P/E = 10.8
Berkowitz owns 5.5 million shares of NOC.
Northrop Grumman Corporation is a high technology company providing innovative solutions in systems integration, defense electronics and information technology for its U.S. and international military, government and commercial customers, as a prime contractor, principal subcontractor, team member or preferred supplier. Northrop Grumman Corp. has a market cap of $18.61 billion; its shares were traded at around $59.3 with a P/E ratio of 10.8 and P/S ratio of 0.5. The dividend yield of Northrop Grumman Corp. stocks is 2.9%. Northrop Grumman Corp. had an annual average earning growth of 1.3% over the past 10 years.
Conclusion
With the exception of NOC, all the low P/E ratio Bruce Berkowitz stocks are in the Health Care sector.
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Berkowitz discussed how he accomplished his success :
1. Ignore the crowd, going toward the distressed areas where many people are running from.
2. Evaluate security based on the cash the business is generating
Going forward, Berkowitz thinks there are still much to do as we just come out of a very distressed period. He likes Healthcare, Real Estate, Retailer, and Financial Services.
Here are Bruce Berkowitz’s low P/E stocks:
Humana Inc. (HUM, Financial) -- P/E = 8.4
Berkowitz owns about 15 million shares of HUM.
Humana, Inc. is a health services company that facilitates the delivery of health care services through networks of providers to its medical members. Humana Inc. has a market cap of $8.16 billion; its shares were traded at around $48.02 with a P/E ratio of 8.4 and P/S ratio of 0.3. 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.
Forest Laboratories Inc. (FRX, Financial) -- P/E = 8.8
Berkowitz owns about 14.9 million shares of 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 Laboratories Inc. has a market cap of $9.46 billion; its shares were traded at around $31.35 with a P/E ratio of 8.8 and P/S ratio of 2.4. 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.
Pfizer Inc (PFE, Financial) -- P/E = 8.9
Berkowitz owns 73 million shares of Pfizer.
Pfizer Inc is a research-based, global pharmaceutical company. Pfizer Inc has a market cap of $156.39 billion; its shares were traded at around $19.38 with a P/E ratio of 8.9 and P/S ratio of 3.2. The dividend yield of Pfizer Inc stocks is 3.3%. Pfizer Inc had an annual average earning growth of 11% over the past 10 years.
Cardinal Health Inc. (CAH, Financial) -- P/E = 9.9
Berkowitz bought 1.5 million shares during 3Q09.
Cardinal Health, Inc. is one of the leading providers of products and services to healthcare providers and manufacturers to help them improve the efficiency and quality of healthcare. Cardinal Health Inc. has a market cap of $11.83 billion; its shares were traded at around $32.62 with a P/E ratio of 9.9 and P/S ratio of 0.1. The dividend yield of Cardinal Health Inc. stocks is 2.2%. Cardinal Health Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Cardinal Health Inc. the business predictability rank of 3-star.
WellPoint Inc. (WLP, Financial) -- P/E = 10.7
Berkowitz owns 6.6 million shares of WLP.
WellPoint, Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. Wellpoint Inc. has a market cap of $30.35 billion; its shares were traded at around $66.22 with a P/E ratio of 10.7 and P/S ratio of 0.5. Wellpoint Inc. had an annual average earning growth of 20.8% over the past 5 years.
Northrop Grumman Corp. (NOC, Financial) -- P/E = 10.8
Berkowitz owns 5.5 million shares of NOC.
Northrop Grumman Corporation is a high technology company providing innovative solutions in systems integration, defense electronics and information technology for its U.S. and international military, government and commercial customers, as a prime contractor, principal subcontractor, team member or preferred supplier. Northrop Grumman Corp. has a market cap of $18.61 billion; its shares were traded at around $59.3 with a P/E ratio of 10.8 and P/S ratio of 0.5. The dividend yield of Northrop Grumman Corp. stocks is 2.9%. Northrop Grumman Corp. had an annual average earning growth of 1.3% over the past 10 years.
Conclusion
With the exception of NOC, all the low P/E ratio Bruce Berkowitz stocks are in the Health Care sector.
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