This is the third article looking at Bruce Berkowitz’s portfolio movements. In the previous two articles, I looked at stocks he kept on buying in the past two quarters and a few real-time trades after the 1Q10 .
In case you have not heard about him yet, Bruce Berkowitz runs the Fairholm Fund and he is a renowned investor. Berkowitz practices focused investing. He puts his eggs in few baskets – $10.5 billion in 21 stocks as of March 31, 2010, according to GuruFocus data. Top 5 positions take up 46.2% of the $10.5 billion and top 10 positions take up 74%. Like Warren Buffett, he believes in over diversification is for people who do not know what they are doing.
In the past decade that ended on May 31, 2010, his Fairholm Fund grew nearly 13% per year during a period in which the broad market retreated 0.82% per year. Berkowitz’s performance Fairholm’s performance as compared against S&P 500 is listed as follows:
Performance of Fairholme Fund
|Year||Return (%)||S&P500 (%)||Excess Gain (%)|
For the past ten years, he underperformed the broad market during only one year.
In this article, I would like to bring your attention to the stocks sold during the past two quarters.
No. 1: Sears Holdings Corp. (NASDAQ:SHLD), Weightings: 15.2% - 14,714,071 Shares
Bruce Berkowitz owns 14,714,071 shares of SHLD, valued as $1,595 million as of Mar. 31, 2010, which accounts for 15.2% of his equity portfolio. Bruce Berkowitz reduced his positions in the Dec. 31, 2009 quarter by 2.13%, again in the Mar. 31, 2010 quarter by 1.59%.
Sears Holdings Corporation, the parent of Kmart and Sears, Roebuck and Co. Sears Holdings Corp. has a market cap of $8.45 billion; its shares were traded at around $73.61 with a P/E ratio of 23 and P/S ratio of 0.2. Sears Holdings Corp. had an annual average earning growth of 13.6% over the past 5 years. The company is run by hedge fund manager Eddie Lampert.
No. 2: WellCare Health Plans Inc. (NYSE:WCG), Weightings: 2.22% - 7,805,576 Shares
Bruce Berkowitz owns 7,805,576 shares of WCG, valued as $233 million as of Mar. 31, 2010, which accounts for 2.22% of his equity portfolio. Bruce Berkowitz reduced his positions in the Dec. 31, 2009 quarter by 6.02%, again in the Mar. 31, 2010 quarter by 0.98%.
WellCare Health Plans, Inc. provides managed care services targeted exclusively to government-sponsored healthcare programs, focusing on Medicaid and Medicare. Wellcare Health Plans Inc. has a market cap of $1.17 billion; its shares were traded at around $27.53 with a P/E ratio of 11.8 and P/S ratio of 0.2.
Here are some notes taken by GuruFocus columnist Ben Claremon during the 2010 value investing congress. In the meeting, Berkowitz talked about his thoughts on WCG:
Question: What’s his current stance on Wellpoint and health insurers?
First off, he is getting older and will need them more. People want to live to 100 but they don’t want t pay for health insurance. Health insurers are the bad boys and girls on the street even though they represent a small portion of the health care industry. There is lots of friction in the health insurance industry. He used to like them because they were defensive. But the real question is who is going to do it other than them? Not the government. Wellpoint has a great franchise but they also like Humana. They like the Medicare Advantage and Medicaid businesses because they got killed as everyone stared to hate these businesses.
No. 3: TAL International Group Inc. (TAL), Weightings: 0.38% - 2,095,876 Shares
Bruce Berkowitz owns 2,095,876 shares of TAL, valued as $40 million as of Mar. 31, 2010, which accounts for 0.38% of his equity portfolio. Bruce Berkowitz reduced his positions in the Dec. 31, 2009 quarter by 11.82%, again in the Mar. 31, 2010 quarter by 12.77%.
TAL International Group, Inc. is a lessor of intermodal containers and chassis. Tal International Group Inc. has a market cap of $759.7 million; its shares were traded at around $24.74 with a P/E ratio of 20.6 and P/S ratio of 2.1. The dividend yield of Tal International Group Inc. stocks is 4.8%. Tal International Group Inc. had an annual average earning growth of 4.3% over the past 5 years.
No. 4: Daily Journal Corp. (NASDAQ:DJCO), Weightings: 0.01% - 12,150 Shares
This is Berkowitz’s love affair with newspaper stocks. Bruce Berkowitz owns 12,150 shares of DJCO, valued as $1 million as of Mar. 31, 2010, which accounts for 0.01% of his equity portfolio. Bruce Berkowitz reduced his positions in the Dec. 31, 2009 quarter by 12.2%, again in the Mar. 31, 2010 quarter by 26.59%.
Daily Journal Corporation publishes newspapers in California, Washington, Arizona, Colorado and Nevada. Daily Journal Corp. has a market cap of $102.7 million; its shares were traded at around $71 with a P/E ratio of 11.8 and P/S ratio of 2.5. Daily Journal Corp. had an annual average earning growth of 11.3% over the past 10 years.
For the past two quarters, Berkowitz has been reducing positions in SHLD, WCG, TAL, DJCO.
To check the complete portfolio and trading activities of Bruce Berkowitz, please go to http://www.gurufocus.com/holdings.php?GuruName=Bruce+Berkowitz
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