Among the Investment Gurus we track, few people seem to have recently made as dramatic a change in their investment approach as Bruce Berkowitz. Instead of concentrating on positions that have demonstrated sustainable long term free cash flow generating capacity, Berkowitz has amassed a portfolio that is more than 50% in financial issues. Jacob Wolinsky expressed some reservations in his recent article Bruce Berkowitz: Where is the free Cash Flow?, and it invited a healthy debate among our users. Brent Arends wrote a blog entitled “How Fairholme Is Breaking Wall Street's Rules” in Wall Street Journal, and it is not all positive as the title suggests. As the article states:
So what would Berkowitz say in face of all the critics and concerns? Kiplinger recently published this interview with Berkkowitz by Andrew Tanzer:
Read the complete Kilinger article here.
You need to go no other than GuruFocus to find Bruce Berkowitz’s entire stock holdings, including financials. Simply click on his name. Here I tabulate the financial holdings for you based on Faiholme Fund's regulatory filing on May 31, 2010:
And a brief review of the companies and his holding history:
American International Group Inc. (AIG, Financial)
American International Group, Inc., world leaders in insurance and financial services, is the international insurance organization with operations in more than one hundred thirty countries and jurisdictions. American International Group Inc. has a market cap of $5.43 billion; its shares were traded at around $40.19 with and P/S ratio of 0.1.
Goldman Sachs Group Inc. (GS, Financial)
Goldman Sachs is a global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments, and high net worth individuals. Goldman Sachs Group Inc. The has a market cap of $79.23 billion; its shares were traded at around $153.9 with a P/E ratio of 7 and P/S ratio of 1.6. The dividend yield of Goldman Sachs Group Inc. The stocks is 0.9%. Goldman Sachs Group Inc. The had an annual average earning growth of 12.7% over the past 10 years.
Citigroup Inc. (C, Financial)
Citigroup Inc., the global financial services company, has some two hundred million customer accounts and does business in more than hundred countries, providing consumers, corporations, governments, and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citigroup Inc. has a market cap of $115.92 billion; its shares were traded at around $4 with and P/S ratio of 1.3.
Bank of America Corp. (BAC, Financial)
Bank of America Corp. is one of the world's financial services companies. Bank Of America Corp. has a market cap of $118.03 billion; its shares were traded at around $13.63 with and P/S ratio of 0.8. The dividend yield of Bank Of America Corp. stocks is 0.3%.
Regions Financial Corp. (RF, Financial)
Regions Financial Corporation is a regional bank holding company and hasbanking-related subsidiaries engaged in mortgage banking, credit life insurance, leasing, and securities brokerage activities with offices in various Southeastern states. Regions Financial Corp. has a market cap of $9.15 billion; its shares were traded at around $7.67 with and P/S ratio of 1. The dividend yield of Regions Financial Corp. stocks is 0.5%.
Berkshire Hathaway Inc. (BRK.A, Financial)
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $197.21 billion; its shares were traded at around $119740 with a P/E ratio of 22.9 and P/S ratio of 2.2. Berkshire Hathaway Inc. had an annual average earning growth of 13.2% over the past 10 years.
To check the complete portfolio and trading activities of Bruce Berkowitz, please go to Bruce Berkowitz and Fairholme Fund. Because Fairholme Fund has a different fiscal year from the calendar year, we have the benefit of knowing Berkowitz’s stock holdings more frequent than quarterly update. Mind you though, he might also manage some other separate accounts other than Fairholme Fund, so sometimes we get data that is a bit off.
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Mr. Berkowitz is an excellent investor, but he has not discovered the Holy Grail. None exists. He will probably make a blunder at some point. Human beings have that tendency. In a concentrated portfolio that will have a big effect. Investors found this out the hard way in the case of the last "super investors" who were thought to walk on water–such as Ken Heebner (at CGM Focus), Bill Nygren (at Oakmark) and Bill Miller (at Legg Mason Value). Each had a terrific run of outperformance, and then fell flat on his face. Investors who had rushed into the fund during the good times, thinking they had found the only fund they ever needed, then dumped it again.By comparing Berkowitz to likes of Heebner, Nygren, and Miller, who betted on the wrong sectors during the 2008-2009 financial crisis, the article is more skeptical than praising.
Bottom line? Anyone investing in Fairholme needs to understand what they own. Be prepared for the possibility of a roller coaster. Fairholme is a good fund to own, but only as one part of a portfolio. Nobody has all the answers.
So what would Berkowitz say in face of all the critics and concerns? Kiplinger recently published this interview with Berkkowitz by Andrew Tanzer:
KIPLINGER’S: Bruce, why have you loaded up on financial stocks?
BERKOWITZ: Financials are going to play the key role in rebuilding the balance sheets of individuals, corporations and municipalities. Without a strong financial-services market, the country will not have the necessary credit to move forward. Our financials’ balance sheets are solid. In fact, they’ve never looked better in terms of capital and reserves. We bought at prices reflecting pessimism in the economy. I do not believe that we are going to lose money at the prices we paid. If the economy just sputters along, we’ll do fine. If the economy recovers, we should do reasonably well. Absent a severe double-dip recession, I don’t see how our shareholders can get hurt.
Read the complete Kilinger article here.
You need to go no other than GuruFocus to find Bruce Berkowitz’s entire stock holdings, including financials. Simply click on his name. Here I tabulate the financial holdings for you based on Faiholme Fund's regulatory filing on May 31, 2010:
| Symbol | Market Cap ($M) | Number of Shares | Value ($1000) | Percentage (%) | % of Company |
|---|---|---|---|---|---|
| AIG | 5,528 | 28,509,000 | 1,008,650 | 10.23 | 21.11 |
| GS | 79,885 | 5,578,900 | 804,812 | 8.17 | 1.08 |
| C | 117,659 | 201,896,100 | 799,509 | 8.11 | 0.7 |
| BAC | 120,885 | 41,626,700 | 655,204 | 6.65 | 0.48 |
| ACF | 3,247 | 24,959,145 | 539,617 | 5.47 | 18.55 |
| RF | 8,824 | 67,636,004 | 516,063 | 5.24 | 5.67 |
| BRK.A | 198,626 | 3,959 | 419,298 | 4.25 | 0.24 |
| CIT | 7,478 | 10,000,829 | 367,930 | 3.73 | 5 |
| BRK.B | 199,566 | 3,826,350 | 269,949 | 2.74 | 0.15 |
| MBI | 1,819 | 19,108,500 | 142,358 | 1.44 | 9.32 |
| MS | 38,650 | 2,050,100 | 55,578 | 0.56 | 0.15 |
And a brief review of the companies and his holding history:
American International Group Inc. (AIG, Financial)
American International Group, Inc., world leaders in insurance and financial services, is the international insurance organization with operations in more than one hundred thirty countries and jurisdictions. American International Group Inc. has a market cap of $5.43 billion; its shares were traded at around $40.19 with and P/S ratio of 0.1.
Goldman Sachs Group Inc. (GS, Financial)
Goldman Sachs is a global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments, and high net worth individuals. Goldman Sachs Group Inc. The has a market cap of $79.23 billion; its shares were traded at around $153.9 with a P/E ratio of 7 and P/S ratio of 1.6. The dividend yield of Goldman Sachs Group Inc. The stocks is 0.9%. Goldman Sachs Group Inc. The had an annual average earning growth of 12.7% over the past 10 years.
Citigroup Inc. (C, Financial)
Citigroup Inc., the global financial services company, has some two hundred million customer accounts and does business in more than hundred countries, providing consumers, corporations, governments, and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citigroup Inc. has a market cap of $115.92 billion; its shares were traded at around $4 with and P/S ratio of 1.3.
Bank of America Corp. (BAC, Financial)
Bank of America Corp. is one of the world's financial services companies. Bank Of America Corp. has a market cap of $118.03 billion; its shares were traded at around $13.63 with and P/S ratio of 0.8. The dividend yield of Bank Of America Corp. stocks is 0.3%.
Regions Financial Corp. (RF, Financial)
Regions Financial Corporation is a regional bank holding company and hasbanking-related subsidiaries engaged in mortgage banking, credit life insurance, leasing, and securities brokerage activities with offices in various Southeastern states. Regions Financial Corp. has a market cap of $9.15 billion; its shares were traded at around $7.67 with and P/S ratio of 1. The dividend yield of Regions Financial Corp. stocks is 0.5%.
Berkshire Hathaway Inc. (BRK.A, Financial)
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $197.21 billion; its shares were traded at around $119740 with a P/E ratio of 22.9 and P/S ratio of 2.2. Berkshire Hathaway Inc. had an annual average earning growth of 13.2% over the past 10 years.
To check the complete portfolio and trading activities of Bruce Berkowitz, please go to Bruce Berkowitz and Fairholme Fund. Because Fairholme Fund has a different fiscal year from the calendar year, we have the benefit of knowing Berkowitz’s stock holdings more frequent than quarterly update. Mind you though, he might also manage some other separate accounts other than Fairholme Fund, so sometimes we get data that is a bit off.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Bruce Berkowitz for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
