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Fairholme Funds Portfolio Update; Forced to Sell Finanicals

Bruce Berkowitz’s Fairholme Funds just released their latest portfolios. The funds almost did not buy any stocks during the three months ended Nov. 30, 2011. Many positions were eliminated or reduced, including Bruce Berkowitz’s favorite financials such as AIG, Citi, Regional Financials etc.

Bruce Berkowitz must be making some hard decisions these days. He is forced to sell the financial stocks that he loves and has convictions in. But apparently shareholders do not agree with him. They vote with their feet, although many of them may have deep losses.

Fairholme Fund’s asset is down to $8 billion, about 6% of the fund is cash, as of Nov. 30, 2011. At the same time Bruce Berkowitz becomes an idiot. Just 9 short months ago, the fund had more than $20 billion and Bruce could do nothing wrong. It is amazing how fast investors piled into his funds, how fast they flee, and how quickly they change their views.

The fund’s redemptions must be continuing, at least until December of 2011, as the asset shrank to $7 by the end of 2011. You may wonder how those people feel as they see the strong recovery of financial stocks after the new year.

Fairholme Focused Income Fund, the new fund Bruce Berkowitz started at the height of his fame, shrank to $300 million. 9 months ago the fund had $455 million.

This is the portfolio chart of Fairholme Fund. You can click on the legend of the chart to show/hide buys, sells, or holdings. Each ball on the chart represents a position in the portfolio. You can move your mouse on the balls to see the details of each position and click to see the details of all guru trades with this position.

These are the summary of the trades of the funds during the 3 months

This is the portfolio chart of Fairholme Focused Income Fund.

The fund has sold every stock other than Bank of America. This is the summary:

Bank of America is probably the most confident stock that he owns now. He made lengthy argument about this position in his latest shareholder letter.

These are the details buys and sells of Fairholme Focused Income Fund and Fairholme Fund.

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 3.7/5 (15 votes)


CanadianClub - 5 years ago    Report SPAM
Could you please clarify where this information re. the Income Fund comes from/when it was published? Because the actual shareholder's report (and the yearly letter) state substantially different holdings - Cf. Page 8:

"The following charts show the top ten holdings and industry categories in descending order of each Fund’s net assets as of November 30, 2011. Portfolio holdings are subject to change without notice.

The Income Fund

Top Ten Holdings by Issuer*

(% of Net Assets)

MBIA, Inc. 34.0%

Emigrant Bancorp, Inc. 17.7%

Sears Holdings Corp. 15.6%

CIT Group Inc. 10.4%

Regions Financial Corp. 5.3%

Bank of America Corp. 4.2%

Jefferies Group, Inc. 3.4%

General Growth Properties, Inc. 1.2%

Wells Fargo & Co. 0.5%

American International Group, Inc. 0.5%

* Excludes cash and money market funds."

A little bit disconcerting to read in your article that the Income Fund was 65% in BAC now...

So, are you really providing information concerning portfolio changes after Nov 30, 2011 ? Because you seem to be referring to that date (end of FY2011). I'm aware that the portfolio holdings could have changed after Nov 30 2011 - but not aware of that being published...

Some kind of misunderstanding - or am I just confused and should consider cutting back on the Canadian Club..?

Edit: Thank you !

Edit No.2: Sorry, my bad - the gurufocus portfolio apparently doesn't list anything but common equity shares - not the preferred equities, warrants, corporate bonds (and cash) the fund also holds - so, "65% BAC" really means 4.2% vs. a massive 95.8% of other holdings.
Gurufocus premium member - 5 years ago
The information source is the annual report of Fairholme Fund here.

We do not count bonds or cash in our percentage calculation.

The Income Fund, Top Ten Holdings by Issuer*, (% of Net Assets) report includes bonds. Actually most of them are bonds, not stocks.

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