2011 was a year to forget the legendary investor and manager of the Fairholme Fund, Bruce Berkowitz. The performance of the fund was awful, investors pulled their money from the fund in droves and key player in the fund Charlie Fernandez departed for reasons that are still unclear.
As many of us expected, Fairholme has bounced back in 2012 because Berkowitz hadn't lost his mind in 2011, it just so happens that stocks don't always go up simply because a great investor owns them. Years of underperformance (often significant) happen to everyone.
Fernandez is also apparently about to bounce back as he has opened his own interesting sounding hedge fund:
Barnstar Opportunities will hold four to six core positions, accounting for 40% of its portfolio, with no one position accounting for more than 15% on a cost basis, said Fernandez. Another “15 or so positions” will account for the remaining 60%:
“These 15 positions are companies that have dislocations that aren't major dislocations which require an enormous amount of research and time, not perhaps as severe as, 'Is the company going to go into bankruptcy? Is the company going to be put out of business? Is the company going to lose its license to operate and have to sell its assets?' They're not going to be those kind of dislocations.”
The fund will be roughly 95% U.S. stocks, 5% Canadian and Australian—Fernandez said this is because his team is familiar with the U.S. legal system and U.S. regulatory bodies, less so with those of foreign countries.
Fernandez has invested his own money in the venture and has already attracted some outside money, although he would not reveal the fund's current assets under administration. He says the minimum investment is $3 million and he thinks their “sweet spot” would be about $1 billion.
Link to entire article: http://www.finalternatives.com/node/22203
As many of us expected, Fairholme has bounced back in 2012 because Berkowitz hadn't lost his mind in 2011, it just so happens that stocks don't always go up simply because a great investor owns them. Years of underperformance (often significant) happen to everyone.
Fernandez is also apparently about to bounce back as he has opened his own interesting sounding hedge fund:
Barnstar Opportunities will hold four to six core positions, accounting for 40% of its portfolio, with no one position accounting for more than 15% on a cost basis, said Fernandez. Another “15 or so positions” will account for the remaining 60%:
“These 15 positions are companies that have dislocations that aren't major dislocations which require an enormous amount of research and time, not perhaps as severe as, 'Is the company going to go into bankruptcy? Is the company going to be put out of business? Is the company going to lose its license to operate and have to sell its assets?' They're not going to be those kind of dislocations.”
The fund will be roughly 95% U.S. stocks, 5% Canadian and Australian—Fernandez said this is because his team is familiar with the U.S. legal system and U.S. regulatory bodies, less so with those of foreign countries.
Fernandez has invested his own money in the venture and has already attracted some outside money, although he would not reveal the fund's current assets under administration. He says the minimum investment is $3 million and he thinks their “sweet spot” would be about $1 billion.
Link to entire article: http://www.finalternatives.com/node/22203
