(GuruFocus, September 23, 2009) Great minds think alike. I am talking about Investment Gurus Warren Buffett and Bruce Berkowitz. Everyone knows who Buffett is. Bruce Berkowitz enjoy less fame than the former, nonetheless he is probably not less achieving, considering his age. Berkowitz manages Fairholme Fund, a mutual fund he started in 1999 and by the last time he reported he had about $8.125 billion under management. The following is his fund’s performance for the past ten years. Look how he outperformed S&P 500 most of the time by a large margin at this page . Pretty cool, isn’t he?
GuruFocus covered Berkowitz's investment strategy in details in this article.
Like Buffett, Berkowitz runs a very concentrated portfolio. As of last quarter when he reported, his $7.11 billion domestic equity portfolio is distributed among only 33 stocks. Top 5 holdings account for 53.3% of assets and top 10 takes up 79.7%. The peril of a concentrated portfolio is it tends to have amplified booms and dooms of that of market. But Berkowitz’s performance seems to suggest a smoother sail. How did he do that? He is known for select stocks based on free cash flows, just as a recent WSJ article entitled ” Cash-Flow Primer Helps In Picking Bargain Stocks” quoted Berkowitz saying:
Despite they may employ different value investing method to select their investments, Berkowitz and Buffett came to same stocks sometimes. GuruFocus has a feature called ”Aggregated Guru Portfolios” and using we find the two Gurus share five ideas. Aside from this five stocks, Berkowitz also own some shares in Berkshire Hathaway, investing in Buffett’s firm directly.
Here are the five stocks:
The Coca-Cola Company (KO, Financial)
The Coca-Cola Company is the world's largest beverage company and is the leading producer and marketer of soft drinks. Along with Coca-Cola recognized as the world's best-known brand The Coca-Cola Company markets four of the world's top five soft drink brands including diet Coke Fanta and Sprite. Through the world's largest distribution system consumers in nearly 200 countries enjoy The Coca-Cola Company's products at a rate of more than 1 billion servings each day. The Cocacola Company has a market cap of $121.85 billion; its shares were traded at around $52.58 with a P/E ratio of 17.3 and P/S ratio of 3.8. The dividend yield of The Cocacola Company stocks is 3.1%. The Cocacola Company had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated The Cocacola Company the business predictability rank of 2-star.
Berkowitz owns 12,900 shares as of 06/30/2009, which accounts for 0.01% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 200,000,000 shares as of 06/30/2009, which accounts for 19.61% of the $48.95 billion portfolio of Berkshire Hathaway.
American Express Company (AXP, Financial)
American Express Company is primarily engaged in the business of providing travel related services financial advisory services and international banking services throughout the world. American Express Travel Related Services Company Inc. provides a variety of products and services including global network services the American Express Card the Optima Card and other consumer and corporate lending products stored value products and several others. American Express Company has a market cap of $39.96 billion; its shares were traded at around $33.6 with a P/E ratio of 24.7 and P/S ratio of 1.4. The dividend yield of American Express Company stocks is 2.1%. American Express Company had an annual average earning growth of 1.3% over the past 10 years.
Berkowitz owns 6,331,150 shares as of 06/30/2009, a decrease of 73.41% of from the previous quarter. This position accounts for 2.07% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 151,610,700 shares as of 06/30/2009, which accounts for 7.2% of the $48.95 billion portfolio of Berkshire Hathaway.
WellPoint Inc. (WLP, Financial)
WellPoint Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. WellPoint Inc. is an independent licensee of the Blue Cross and Blue Shield Association and serves its members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado Connecticut Georgia Indiana Kentucky Maine Missouri Nevada New Hampshire Ohio Virginia (excluding the Northern Virginia suburbs of Washington D.C.) Wisconsin; and through HealthLink and UniCare. Wellpoint Inc. has a market cap of $24.73 billion; its shares were traded at around $52.06 with a P/E ratio of 8.7 and P/S ratio of 0.4. Wellpoint Inc. had an annual average earning growth of 20.8% over the past 5 years.
Berkowitz owns 8,710,710 shares as of 06/30/2009, which accounts for 6.23% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 3,500,000 shares as of 06/30/2009, a decrease of 26.74% of from the previous quarter. This position accounts for 0.36% of the $48.95 billion portfolio of Berkshire Hathaway.
UnitedHealth Group Inc. (UNH, Financial)
UnitedHealth Group Inc. offers health care coverage and related services to help people achieve improved health and well-being through all stages of life. The company's products and services reflect a number of core capabilities including medical information management health benefit administration care coordination risk assessment and pricing health benefit design and provider contracting. With these capabilities it is able to provide comprehensive health care management services through organized health systems and insurance products. Unitedhealth Group Inc. has a market cap of $31.01 billion; its shares were traded at around $26.68 with a P/E ratio of 8.8 and P/S ratio of 0.4. The dividend yield of Unitedhealth Group Inc. stocks is 0.1%. Unitedhealth Group Inc. had an annual average earning growth of 30.4% over the past 10 years. GuruFocus rated Unitedhealth Group Inc. the business predictability rank of 5-star.
Berkowitz owns 9,914,633 shares as of 06/30/2009, a decrease of 24.65% of from the previous quarter. This position accounts for 3.48% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 3,400,000 shares as of 06/30/2009, a decrease of 24.44% of from the previous quarter. This position accounts for 0.17% of the $48.95 billion portfolio of Berkshire Hathaway.
Wesco Financial Corp. (WSC, Financial)
Wesco Financial Corp. is engaged in three principal businesses through wholly owned subsidiaries: the insurance business through Wesco-Financial Insurance Company and The Kansas Bankers Surety Company; and the steel service center business through Precision Steel Warehouse Inc. and the furniture rental center through CORT Business Services Corporation. Wesco Financial Corp has a market cap of $2.26 billion; its shares were traded at around $317.65 with a P/E ratio of 33.2 and P/S ratio of 2.8. The dividend yield of Wesco Financial Corp stocks is 0.5%. Wesco Financial Corp had an annual average earning growth of 2.8% over the past 10 years.
Berkowitz owns 980 shares as of 06/30/2009, which accounts for less than 0.01% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 5,703,087 shares as of 06/30/2009, which accounts for 3.39% of the $48.95 billion portfolio of Berkshire Hathaway.
Conclusion
Berkowitz shares five stocks ideas with Buffett (six if you count in Berkshire).
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Bruce Berkowitz for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
GuruFocus covered Berkowitz's investment strategy in details in this article.
Like Buffett, Berkowitz runs a very concentrated portfolio. As of last quarter when he reported, his $7.11 billion domestic equity portfolio is distributed among only 33 stocks. Top 5 holdings account for 53.3% of assets and top 10 takes up 79.7%. The peril of a concentrated portfolio is it tends to have amplified booms and dooms of that of market. But Berkowitz’s performance seems to suggest a smoother sail. How did he do that? He is known for select stocks based on free cash flows, just as a recent WSJ article entitled ” Cash-Flow Primer Helps In Picking Bargain Stocks” quoted Berkowitz saying:
"Look at it like the corner grocery store; cash goes into the register, cash comes out of the register. What's left in the register is free cash flow," said Bruce Berkowitz, manager of the value-oriented Fairholme Fund (FAIRX), who uses free cash flow in assessing a stock. "The owner could decide how to allocate it - spend, invest, pay back debt or grow the business and put more money in the register."
Despite they may employ different value investing method to select their investments, Berkowitz and Buffett came to same stocks sometimes. GuruFocus has a feature called ”Aggregated Guru Portfolios” and using we find the two Gurus share five ideas. Aside from this five stocks, Berkowitz also own some shares in Berkshire Hathaway, investing in Buffett’s firm directly.
Here are the five stocks:
The Coca-Cola Company (KO, Financial)
The Coca-Cola Company is the world's largest beverage company and is the leading producer and marketer of soft drinks. Along with Coca-Cola recognized as the world's best-known brand The Coca-Cola Company markets four of the world's top five soft drink brands including diet Coke Fanta and Sprite. Through the world's largest distribution system consumers in nearly 200 countries enjoy The Coca-Cola Company's products at a rate of more than 1 billion servings each day. The Cocacola Company has a market cap of $121.85 billion; its shares were traded at around $52.58 with a P/E ratio of 17.3 and P/S ratio of 3.8. The dividend yield of The Cocacola Company stocks is 3.1%. The Cocacola Company had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated The Cocacola Company the business predictability rank of 2-star.
Berkowitz owns 12,900 shares as of 06/30/2009, which accounts for 0.01% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 200,000,000 shares as of 06/30/2009, which accounts for 19.61% of the $48.95 billion portfolio of Berkshire Hathaway.
American Express Company (AXP, Financial)
American Express Company is primarily engaged in the business of providing travel related services financial advisory services and international banking services throughout the world. American Express Travel Related Services Company Inc. provides a variety of products and services including global network services the American Express Card the Optima Card and other consumer and corporate lending products stored value products and several others. American Express Company has a market cap of $39.96 billion; its shares were traded at around $33.6 with a P/E ratio of 24.7 and P/S ratio of 1.4. The dividend yield of American Express Company stocks is 2.1%. American Express Company had an annual average earning growth of 1.3% over the past 10 years.
Berkowitz owns 6,331,150 shares as of 06/30/2009, a decrease of 73.41% of from the previous quarter. This position accounts for 2.07% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 151,610,700 shares as of 06/30/2009, which accounts for 7.2% of the $48.95 billion portfolio of Berkshire Hathaway.
WellPoint Inc. (WLP, Financial)
WellPoint Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. WellPoint Inc. is an independent licensee of the Blue Cross and Blue Shield Association and serves its members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado Connecticut Georgia Indiana Kentucky Maine Missouri Nevada New Hampshire Ohio Virginia (excluding the Northern Virginia suburbs of Washington D.C.) Wisconsin; and through HealthLink and UniCare. Wellpoint Inc. has a market cap of $24.73 billion; its shares were traded at around $52.06 with a P/E ratio of 8.7 and P/S ratio of 0.4. Wellpoint Inc. had an annual average earning growth of 20.8% over the past 5 years.
Berkowitz owns 8,710,710 shares as of 06/30/2009, which accounts for 6.23% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 3,500,000 shares as of 06/30/2009, a decrease of 26.74% of from the previous quarter. This position accounts for 0.36% of the $48.95 billion portfolio of Berkshire Hathaway.
UnitedHealth Group Inc. (UNH, Financial)
UnitedHealth Group Inc. offers health care coverage and related services to help people achieve improved health and well-being through all stages of life. The company's products and services reflect a number of core capabilities including medical information management health benefit administration care coordination risk assessment and pricing health benefit design and provider contracting. With these capabilities it is able to provide comprehensive health care management services through organized health systems and insurance products. Unitedhealth Group Inc. has a market cap of $31.01 billion; its shares were traded at around $26.68 with a P/E ratio of 8.8 and P/S ratio of 0.4. The dividend yield of Unitedhealth Group Inc. stocks is 0.1%. Unitedhealth Group Inc. had an annual average earning growth of 30.4% over the past 10 years. GuruFocus rated Unitedhealth Group Inc. the business predictability rank of 5-star.
Berkowitz owns 9,914,633 shares as of 06/30/2009, a decrease of 24.65% of from the previous quarter. This position accounts for 3.48% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 3,400,000 shares as of 06/30/2009, a decrease of 24.44% of from the previous quarter. This position accounts for 0.17% of the $48.95 billion portfolio of Berkshire Hathaway.
Wesco Financial Corp. (WSC, Financial)
Wesco Financial Corp. is engaged in three principal businesses through wholly owned subsidiaries: the insurance business through Wesco-Financial Insurance Company and The Kansas Bankers Surety Company; and the steel service center business through Precision Steel Warehouse Inc. and the furniture rental center through CORT Business Services Corporation. Wesco Financial Corp has a market cap of $2.26 billion; its shares were traded at around $317.65 with a P/E ratio of 33.2 and P/S ratio of 2.8. The dividend yield of Wesco Financial Corp stocks is 0.5%. Wesco Financial Corp had an annual average earning growth of 2.8% over the past 10 years.
Berkowitz owns 980 shares as of 06/30/2009, which accounts for less than 0.01% of the $7.11 billion portfolio of Fairholme Capital Management.
Buffett owns 5,703,087 shares as of 06/30/2009, which accounts for 3.39% of the $48.95 billion portfolio of Berkshire Hathaway.
Conclusion
Berkowitz shares five stocks ideas with Buffett (six if you count in Berkshire).
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Bruce Berkowitz for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
