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Trader Mark
Trader Mark
Articles (5983)  | Author's Website |

AIG (AIG) Up 50% in the Past 3 Months - Bruce Berkowitz Wins Again

December 21, 2010 | About:
Bruce Berkowitz of Fairhome Fund (FAIRX) wins again. His overweight of AIG (NYSE:AIG) is another winner ... the stock is up some 50% in 3 months. (then again, what isn't in the teflon market?) ;)


From last week:

  • Treasury, which invested more than $49 billion to prop up AIG, plans to convert its preferred stake into common stock by March 15 and will sell the shares to private investors. The U.S. may need one to two years, depending on market conditions, to sell all of its AIG shares, which will be more than 90 percent of the stock in the New York-based insurer, Miller said.

Unfortunately it appears Bruce pared back his holdings of AIG from a >10% weight to "only" 7%... but FAIRX is still up 6% for the month. The next great battle stock is St Joe Corp (JOE) where Berkowitz is pitted against hedge fund honcho David Einhorn - talk about a showdown. Thus far Einhorn's revelation he shorted JOE has crushed the stock, but Berkowitz just joined the board of directors in the past week or so - and I am sure he has been adding stock at a rapid clip as the price goes down. (last disclosure was a sub 4% stake) In the end I would expect both men to 'win' as they have different time frames....

Bigger picture learned from this seat (for next crisis) is to learn to think more like a citizen of the USSR circa 1975: don't bet against anything the U.S. government will bring all its horses (and men) to defend. Even AIG which was a hull of a corporation and in any form of free market would have been destroyed in 2008 is a 'winner'. Speaking of which, Berkowitz is heavy into Citigroup (C), and Bank of America (BAC). (Maybe in the next disclosure statement, he will have added General Motors as well) Free market capitalism corporate socialism is a fine thing, indeed!

[Dec 10, 2010: Bruce Berkowtiz of Fairholme Funds - the Megamind of Miami]

[Aug 30, 2010: Bruce Berkowitz of Fairholme Fund Interviewed on Consuelo Mack WealthTrack]

[Jan 31, 2010: Bruce Berkowitz of Fairholme Funds Slashes Pfizer Stake, Exits Boeing and Northrop Grumman; Add to Berkshire Hathaway]

[Feb 17, 2009: Hedge Funds Pile into Citigroup; as does Bruce Berkowitz of Fairholme Funds]

[Feb 3, 2009: Fairholme Funds (FAIRX) 2008 Report]

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Trader Mark

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About the author:

Trader Mark
Mark's equity focus is identifying secular growth trends, and the companies most likely to benefit from these macro trends. Stocks are identified through fundamental analysis, although basic technical analysis is used in determining entry and exit points. With a degree in Economics from the University of Michigan, a broader understanding of the economy as a whole, along with interpreting investor psychology is also a major interest for Mark. His career background has focused on financial analysis in corporate America. Visit Mark's website at http://www.fundmymutualfund.com/

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Rating: 5.0/5 (2 votes)


Halis - 6 years ago    Report SPAM
I don't think Berkowitz ever paired back AIG, in fact, he's been buying more. If it's a smaller % of the portfolio then that may be that he has gotten more money under management? Not sure.

I wouldn't hold your breath for Berkowitz to buy GM though. I know I won't be buying it.
Cowboy77 - 6 years ago    Report SPAM
Yeah, how do you figure he's reduced his position?
Gangstarr - 6 years ago    Report SPAM
Some people critique his strong move into financials as being non-risk averse, however, he's buying most of these companies below their cash per share value, and below tangible book. He's being prudent in protecting the downside for his shareholders. Morgan Stanley trades at approx. 5 x cash flow and below tangible book for example. I don't think his latest moves are as risky as some people think.

Halis - 6 years ago    Report SPAM
I agree, of course I am biased because I own AIG.

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