Bruce Berkowitz is credited for buying stocks that the stock analysts do not like in a BusinessWeek article.
Excerpt:
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Excerpt:
The strategy of picking stocks that other investors don’t want is working for Bruce Berkowitz, named U.S. stock manager of the decade in January by Morningstar Inc. He piled into Hoffman Estates, Illinois-based Sears Holdings Corp. and American International Group Inc. even as analysts urged investors to dump the shares. The companies are two of the three lowest-rated stocks in the S&P 500, with “sells” making up at least 40 percent of the recommendations, data compiled by Bloomberg show.
Sears, the largest U.S. department-store chain, was the second-biggest holding in Berkowitz’s $14.8 billion Fairholme Fund as of Feb. 28. He bought more than 30 million shares of AIG to become the largest private holder of the New York-based insurer, according to data compiled by Bloomberg.
Berkowitz’s fund gained 25 percent in 2004, compared with the S&P 500’s 9 percent return, thanks in part to MCI Communications Corp. shares before New York-based Verizon Communications Inc. bought the telephone company. Fairholme has beaten 98 percent of its rivals in the past five years, data compiled by Bloomberg show.
“There was a time when the public could buy the most- hated, but not-unprofitable MCI, formerly known as WorldCom, for less than the cash the company had in the bank,” Berkowitz said in an e-mail. “Investing is all about comparing what you give, purchase price, versus what you get, selling price and dividends and other potential sources of cash.”
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