(GuruFocus, July 12, 2009) There is a good article in today’s Los Angles Times entitled “ Market bulls take a rough ride ” by Tom Petruno. It contains some comments by Bruce Berkowitz on today’s rough market:
On Economic Outlook
On Stock Market Valuation
Fairholme Fund 2Q09 Return
Favorite Industries
Time Is The Ally
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On Economic Outlook
Bruce Berkowitz, co-manager of the $8.6-billion-asset Fairholme Fund in Miami, says he agrees with the widely held view that the U.S. economy faces "a long hangover" ahead.
On Stock Market Valuation
But he also believes that much of that struggle already is reflected in depressed stock prices, he said. For a long-term investor, "There are better bargains now than any time in the last 10 years," Berkowitz said.
Fairholme Fund 2Q09 Return
Fairholme Fund's Berkowitz also is a big fan of companies that generate lots of cash flow. His fund produced a 32.7% gain for his shareholders in the second quarter as holdings including healthcare provider WellPoint Inc. and auto loan firm AmeriCredit Corp. resurged.
Favorite Industries
Berkowitz favors two industries in particular: healthcare, including such names as WellPoint and Pfizer; and defense, including Boeing and Northrop Grumman.
Both industries, he said, are "essential services to the well-being of our country." And although that scares off some investors who fear government pressure on the industries to cut costs, Berkowitz's view is that "people have priced these companies as if the government is going to replace them. But there are no alternatives to them."
Time Is The Ally
Not surprisingly, Berkowitz and other fund managers say their greatest ally now is time -- if investors will stay put through what could be a rough summer.
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