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Fairholme Fund Continues to Face Redemption Pressure

April 27, 2012 | About:

We have just updated Fairholme Fund’s latest portfolio. As we discussed, Fairholme Fund sold Citigroup (NYSE:C) and Berkshire Hathaway (NYSE:BRK.B) for the three months ended on February 29. Fairholme Fund reported total assets of $8.2 billion. About $7.1 billion was in stocks, $0.6 billion was in preferred, warrants and the remaining $0.5 billion was in cash.

Fairholme still faces redemption pressure although it went from the bottom 99% to top 1% of mutual funds in the first quarter. Since Nov. 30, 2011, the recovery of financial stocks has lifted the fund’s performance dramatically. The value of the fund’s top holdings grew by almost $1 billion. Please see the table below:

Quarter ended 2/29/2012 Quarter ended on 11/30/2012 Change
Symbol Number of Shares Value ($1000) Number of Shares Value ($1000) Gain(%) Gain ($1000)
AIG 84,130,225 2,147,480 84,413,425 1,967,680 9% 179,800
AAIGF.PK 302,221,000 1,145,570 302,221,000 916,145 25% 229,425
SHLD 14,212,673 990,055 14,212,673 857,450 15% 132,605
CIT 16,358,129 665,939 16,358,129 553,886 20% 112,053
BAC 81,607,015 650,408 81,607,015 443,942 47% 206,466
JOE 23,136,502 361,547 23,136,502 322,722 12% 38,825
LUK 12,186,350 347,189 12,186,350 285,404 22% 61,785
MBI 20,501,100 221,002 20,501,100 198,861 11% 22,141
AIG.WS 21,588,480 178,537 21,588,480 132,121 35% 46,416
Total Value for Quarter (2/29/2012): 6,707,727 Total Value for Quarter (11/30/2011): 5,678,211 Difference 1,029,516
With these outsized gains in Fairholme’s top holdings, one would expect that the total assets at Fairholme would grow by a similar amount. But the total assets in the Fairholme Fund are almost unchanged over the past three months. This means that almost all of the fund’s growth was taken out by investors.

It is ironic how quickly investors poured tens of billions into the Fairholme Fund at the worst time, when Bruce Berkowitz could do nothing wrong, and how quickly they rush out when it is exactly the time they should stay. Bruce Berkowitz lost these investors’ money, but don’t blame him for that.

Check out Bruce Berkowitz’s complete portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Bruce Berkowitz.

About the author:

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

Rating: 3.8/5 (20 votes)


Fareastwarriors - 5 years ago    Report SPAM
I guess my investment in the fund didn't move the needle. Stay the course!
Buffetteer17 premium member - 5 years ago
I'm pretty pleased with the fund's recent performance. My stake, built during Jun-Dec 2011, is up 10%. Previously, as an individual stock picker, I avoided all financial stocks on the grounds that I am not competent to evaluate them. I had the feeling that the financials had been oversold, so I decided to let Mr. Berkowitz pick stocks for me with a fraction of my portfolio. FAIRX is currently 8% of my stock portfolio.

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