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Sally Jones
Sally Jones
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Berkowitz and Lampert – Luck, Concentration, Sears and Other Top Holdings

July 17, 2013 | About:

A great bit of investing advice, Bruce Berkowitz once said, “Always assume you will have bad luck.” With several of their top holdings way up over 12 months, gurus Bruce Berkowitz and Edward Lampert have both had good luck and bad, and they both run concentrated portfolios. Guru investor Bruce Berkowitz, founder of Fairholme Capital Management, has a reputation for concentrating a portfolio.

As of June 11, 2013, Fairholme Capital Management lists 21 stocks, with three new stocks, in a portfolio valued at $7.86 billion, and a quarter-over-quarter turnover of 6%. The Berkowitz portfolio is heavily weighed with financial services, at 64.3%.

One large holding Berkowitz has in common with Edward Lampert is Sears Holdings Corporation (NASDAQ:SHLD), with a little over 19.5 million shares compared to Lampert’s 33.8 million shares. As the third top holding for Berkowitz, Sears Holdings makes up 12.4% of his portfolio. Out of 20 quarters, the first quarter of 2009 was the only quarter showing a gain of 19.6% for Berkowitz. His holding history:

The Sears makeover visionary and entrepreneurial investor Edward Lampert is founder of ESL Investments Inc., a private investment company, and the chairman of Sears Holdings Corporation. His current portfolio lists eight stocks, no new stocks, and a total value of $4.02 billion with a quarter-over-quarter turnover of 8%. On the list of Forbes 400 Richest Americans, Lampert is No. 68.

For Lampert, Sears is his top holding, comprising 42% of a portfolio almost entirely built on the consumer cyclical sector, at 97.5%.

In nine quarters, SHLD has never produced a gain for Lampert.

As it readjusts to Lampert’s vision for today’s consumers, the Sears share price dropped 56% in 2011 but then spiked 74.99% last March. The SHLD share price is up 5% since January 2013 but down 13% over 12 months. Sears has a market cap of $4.65 billion and trades at a P/B of 1.70. The current SHLD share price is: $43.84.

Historical pricing:


In addition to Sears Holdings, the other top two holdings for Berkowitz are:

American International Group Inc. (NYSE:AIG) - Up 48% over 12 Months

Weighting: 42.4%

Shares Owned: 85,900,077

Current Share Price: $46.97

Up 48% over 12 months, American International Group Inc. (NYSE:AIG) has a market cap of $70.03 billion; its shares trade at around $46.97 with a P/E ratio of 37.20 and P/B ratio of 0.70.

Bank of America Corporation (NYSE:BAC) - Up 90% over 12 Months

Weighting: 15.6%

Shares Owned: 100,589,215

Current Share Price: $14.34

Up 90% over 12 months, Bank of America Corporation (NYSE:BAC) has a market cap of $154.15 billion; its shares trade at around $14.34 with a P/E ratio of 44.40 and P/B ratio of 0.70. The dividend yield of Bank of America Corporation stocks is 0.30%.

After Sears, the other top holdings in Lampert’s portfolio are:

AutoNation Inc. (NYSE:AN) - Up 7% over 12 Months

Weighting: 34.2%

Shares Owned: 31,444,341

Current Share Price: $45.42

Up 7% over 12 months, AutoNation Inc. (NYSE:AN) has a market cap of $5.59 billion; its shares trade at around $45.42 with a P/E ratio of 17.30 and P/B ratio of 3.20.

Gap Inc. (NYSE:GPS) - Up 54% over 12 Months

Weighting: 12.2%

Shares Owned: 13,918,647

Current Share Price: $44.70

Up 54% over 12 months, Gap Inc. (NYSE:GPS) has a market cap of $21 billion; its shares trade at around $44.70 with a P/E ratio of 17.20 and P/B ratio of 6.60. The dividend yield of Gap Inc. (NYSE:GPS) stocks is 1.20%. Gap Inc. has had an annual average earnings growth of 8% over the past 10 years.

Learn more about the Fairholme Fund and the Fairholme Focused Income Fund.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.1/5 (8 votes)


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