Fairholme (FAIRX) circa 2011: Two sides of the coin

Bruce Berkowitz’s fund has gotten a lot of media attention lately. Investors point to significant financial sector exposure and investments in AIG, BofA, Citi and St. Joe stock in particular as a drag on the fund’s 2011 results. While admitting on the conference call that the fund’s performance this year was “horrible” and the health […]

October 05, 2011

Bruce Berkowitz’s fund has gotten a lot of media attention lately. Investors point to significant financial sector exposure and investments in AIG, BofA, Citi and St. Joe stock in particular as a drag on the fund’s 2011 results. While admitting on the conference call that the fund’s performance this year was “horrible” and the health care position sell-off happened “too early”, Berkowitz is very consistent in his investment style (“Ignore the Crowd”) and is making pointed sector- and security-specific bets. Notably, his decision last month to potentially increase the fund’s position in St. Joe’s stock to 50% of shares outstanding (up from 30%) invited a lot of criticism from investors and the media. But what difference does it make for the fund’s performance? How do we know what portion of the fund’s results to-date are due to sector vs. security bets?

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