Summary of Berkowitz's comments:
- The math and numbers show that the financials are improving, the market just hasn’t believed it to date.
- He believes recapitalized institutions will at some point have the ability to earn 10% on shareholder equity. If you buy them at half of book value, then you are earning 20%.
- There is even a larger margin of safety because of the tax losses these companies are carrying.
- He wants to be judged on long-term performance, not short-term. This is for both good and bad performance. There is nothing especially meaningful about one calendar year and Fairholme is in this for many years.
- In extreme cycles to survive is to win. Investing in the banking sector survivors will work out well.
- He feels most comfortable with Bank of America (BAC, Financial), likes the CEO; he sees it as similar to his Wells Fargo (WFC, Financial) position in the early '90s.
- The recent settlement is good in that it removes uncertainty which investors hate.
- He likes Berkshire (BRK.A, Financial)(BRK.B, Financial) and Leucadia (LUK, Financial) because leopards don’t change their spots, they have done well in the past and will in the future
- St. Joe (JOE, Financial) was never as large a position for the fund. It is about real estate. Right now the real estate is worth very little; at some point demand will increase and the value of that real estate will move quickly. It is the last sparse spot in Florida.
Also check out:
- The math and numbers show that the financials are improving, the market just hasn’t believed it to date.
- He believes recapitalized institutions will at some point have the ability to earn 10% on shareholder equity. If you buy them at half of book value, then you are earning 20%.
- There is even a larger margin of safety because of the tax losses these companies are carrying.
- He wants to be judged on long-term performance, not short-term. This is for both good and bad performance. There is nothing especially meaningful about one calendar year and Fairholme is in this for many years.
- In extreme cycles to survive is to win. Investing in the banking sector survivors will work out well.
- He feels most comfortable with Bank of America (BAC, Financial), likes the CEO; he sees it as similar to his Wells Fargo (WFC, Financial) position in the early '90s.
- The recent settlement is good in that it removes uncertainty which investors hate.
- He likes Berkshire (BRK.A, Financial)(BRK.B, Financial) and Leucadia (LUK, Financial) because leopards don’t change their spots, they have done well in the past and will in the future
- St. Joe (JOE, Financial) was never as large a position for the fund. It is about real estate. Right now the real estate is worth very little; at some point demand will increase and the value of that real estate will move quickly. It is the last sparse spot in Florida.
Also check out:
