Bruce Berkowitz (Trades, Portfolio) ended the year with no new stock picks to Fairholme Capital Management’s portfolio.
Instead, the guru broadened his position in Florida-based real estate developer The St. Joe Co. (JOE, Financial); and got a lot lighter on Sears (SHLD, Financial) and a real estate investment trust that is redeveloping former Sears properties and leasing them to specialty retailers at substantially higher rents.
Seritage Growth and Sears
The REIT, Seritage Growth Properties (SRG, Financial), receives more than 50% of gross revenue from Sears Holdings.
Berkowitz reduced his position by 13%.
On Friday, Seritage was trading at over $41 a share, up 2.5%. In the last six months, Seritage stock dropped 11%. Analysts believe the stock is taking a hit as a result of fears of underperfomance by Sears.
Its market cap is $2 billion and GuruFocus rates it a 3 of 10 in financial strength and a 4 of 10 in profitability and growth.
Sears
A former member of the Sears board of directors, Berkowitz has been steadily diminishing his stake in the company over the last six months, though he still owns 19.8% of the retailer, GuruFocus shows.
At one point, Berkowitz held as many as 30 million shares. The amount has been whittled down to about 21 million as it stands. He has sold a cumulative 9.9 million shares.
Records show he has taken a loss of 87%. He began purchasing shares in 2012.
In Friday morning trading, Sears was up 6.84% to $2.81 a share. The stock has dropped 64% in the last 12 months.
Sectors in portfolio
Berkowitz has a total of five stocks in his portfolio valued at more than $726 million.
More than 87% of his portfolio is in real estate; 12.2% is in consumer cyclical; the remainder is in ETFs, options and consumer defensive.
St. Joe
Fairholme expanded its position in St. Joe by 3.3%, raising the exposure to a weighted 69% of the portfolio. It holds more than 28 million shares of St. Joe, GuruFocus shows.
St. Joe is one of Florida’s largest landowners with about 573,000 acres. It operates residential real estate and commercial real estate properties and resorts.
St. Joe was trading at over $18 a share on Friday, up 1.1% It shares have jumped 7% in the last year.
Berkowitz is hopeful the development will draw lucrative businesses to the area, opening up opportunities for population growth and business opportunities. He wrote last summer that the area was increasing jobs and trying to create global high-tech manufacturing facilities.
St. Joe has a market cap of $1.2 billion. GuruFocus ranks it a 5 out of 10 in financial strength and a 4 of 10 in profitability and growth.
Some hazards include a decline in revenue per share and gross margins.
However, the company’s price-share (P/S) ratio is close to a two-year low and it has an Altman Z-score of 2.74.
Leucadia National
The portfolio also shows a position (66,000 shares) of Leucadia National Corp. (LUK, Financial), a national conglomerate that operates subsidiaries in the beef and banking industries.
The New York-based company’s stock was trading at $25 a share, up 0.26%. It has seen its stock drop by 3% in the last 12 months.
The company is part of a large conglomerate of businesses modeled after Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial). For this, it’s often called a mini-Berkshire or a Baby Berkshire.
GuruFocus gives it a financial strength rating of 5 out of 10 and a profitability and growth rating of 8 of 10.
According to the Peter Lynch chart, the company is trading at about fair value with the median of $25 a share.
