Bruce Berkowitz (Trades, Portfolio) released his fourth-quarter letter and portfolio update Wednesday, reporting he purchased three new stocks.
Berkowitz’s Fairholme Fund (Trades, Portfolio) fell 11.5% during 2015, versus a 1.38% gain for the S&P 500 Index, as some of the top names in his concentrated portfolio – St. Joe (JOE, Financial), Sears (SHLD, Financial) and Fannie Mae (FNMAS) – struggled. The investor’s forays into companies trading at distressed or out-of-favor market prices have often led to broad swings in performance in the past. In his worst year, 2011, Berkowitz lost 32.4%, and followed in 2012 with a 35.8% gain.
“My three decades of experience dictates that the seeds of great performance are planted during the toughest of times,” Berkowitz said in his letter. “Above-average returns only seem painless in hindsight. After all, if it were easy, everyone would do it.”
In the most recent quarter, Berkowitz expressed interest in oil companies trading at discounts and foresaw an imminent price increase in oil’s price per barrel. “Prices cannot stay below marginal costs when demand grows and supply depletes – at least, not for long,” he said.
Berkowitz purchased two of them, MRC Global (MRC, Financial) and NOW Inc. (DNOW, Financial).
“Both companies operate in the supply chain and inventory management industry, and should be among the first to experience a rebound with higher oil and gas prices,” he said. “Ultimately, MRC and NOW should consider a merger in order to create huge efficiencies and maximize value for all shareholders.”
Berkowitz also disclosed a position in Sears Hometown & Outlet Stores Inc. (SHOS, Financial) during the quarter.
Berkowitz purchased 6,266,800 shares of Now Inc., a 3.82% portfolio weight. The shares cost $17 on average for the quarter.
Now Inc. is a distributor to the upstream, midstream, downstream and industrial markets. Now Inc. has a market cap of $1.42 billion; its shares were traded at around $13.20 with and P/S ratio of 0.42.
MRC Global Inc. (MRC, Financial)
Berkowitz purchased 4,720,500 shares of MRC Global Inc., a 2.3% portfolio weight. The company’s shares cost $13 on average for the quarter.
MRC Global Inc. was incorporated in the state of Delaware on Nov. 20, 2006. MRC Global Inc. has a market cap of $962.76 million; its shares were traded at around $9.42 with a P/E ratio of 11.35 and P/S ratio of 0.18.
Sears Hometown & Outlet Stores Inc. (SHOS, Financial)
Berkowitz also disclosed ownership of 640,300 shares of Sears Hometown & Outlet Stores, a 0.17% portfolio holding. The shares cost $8 on average for the quarter.
Sears Hometown & Outlet Stores Inc. was incorporated in Delaware on April 23, 2012. Sears Hometown & Outlet Stores Inc. has a market cap of $149.060 million; its shares were traded at around $6.56 with and P/S ratio of 0.06.
See Bruce Berkowitz (Trades, Portfolio)’s Fairholme Fund (Trades, Portfolio) portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days.
