bargainman Posted October 14, 2012 Share Posted October 14, 2012 What I found interesting is the lack of mention of MBI. If you look at his smaller fund: http://portfolios.morningstar.com/fund/holdings?t=FAAFX®ion=USA&culture=en-us MBI is his biggest percentage holding at 30+%. One can perhaps infer that this is his greatest conviction holding for a smaller investor... AIG in this port is about 20%, although he also has 2% in warrants... Link to comment Share on other sites More sharing options...
Liberty Posted October 15, 2012 Share Posted October 15, 2012 One thing that Berkowitz mentions that I find very important is concentration in your best ideas. "Why buy your 10th best idea when you can add to your best one?" Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 15, 2012 Share Posted October 15, 2012 i wish consuelo had probed further, and not let berkowitz get away with face-saving remarks (e.g. "look at our 60 month record") that were clearly intended to escape discussion of his recent underperformance and mistakes. he makes zero mention of the fact that he bought tons of AIG stocks over $40/sh, on the faulty assumption that the government wouldnt sell below book value. he makes zero mention of the fact that he failed to foresee Bac's PTPP falling off a cliff from $45bn when he bought the stock to less than $30bn now. or the fact that the economic environment today is almost polar opposite of the 90s, when the greatest bull market in history of the us stock market started. his SHLD liquidation thesis might make him some profits down the line, but factoring in the length of his investment (over 5 years) it will clearly have been a mistake. See Buffett's berkshire letter on "biggest mistakes of my first 25 years", where he discusses the trap of buying into bad businesses on a liquidation thesis. He clearly stated that he couldn't see the future, but in the long run, his AIG and BAC should make money. It's interesting that he said that BAC was worth $20, and AIG is about $65, yet he recommend buying AIG, given that BAC at $9 would be a better value. W.r.t to SHLD, the malls aren't where people go to anymore -- I buy most of my stuff online, so the value/anchoring positions in malls isn't what they used to be. After flying with my eyes through Berkowitz's 3rd case study presentation, I personally got some impression that the real estate alone is probably worth more than current book value,... specially the 50 year lease agreements with no rental escalators should have an enormous time value. If I see the current market cap of Simons (SPG) at $46 billion for 241 million square feet of real estate,... my mind has only one very simple equation ---> ------- Simon Property Group Inc. (SPG) $46 billion market cap = 245 million square feet of real estate Sears Holdings Corporation (SHLD) $6.4 billion market cap = 256+ million square feet of real estate ------- My eye catches some very easy seeable -> invisible <- imbalance in intrinsic value. Why is SHLD's market value compared with SPG's so low. It can only be some wrong assessment by silly Mr. Market. So I guess, my lazy intrinsic value estimate for Sears should be somewhere north of current values. I haven't set any specific numbers in my mind yet... but in the end they should be rather roughly right than precisely wrong. ------ http://static5.businessinsider.com/image/50533892eab8eaca25000005-900/.jpg http://static3.businessinsider.com/image/5053389369bedd6206000001-900/.jpg http://static3.businessinsider.com/image/50533895ecad04f22e00002b-900/.jpg http://static2.businessinsider.com/image/5053389669bedd4f0300000b-900/.jpg http://static6.businessinsider.com/image/50533897ecad04e02e000018-900/.jpg http://static3.businessinsider.com/image/50533897ecad041b2f00000b-900/.jpg http://static2.businessinsider.com/image/5053389869bedde105000019-900/.jpg http://static2.businessinsider.com/image/50533899ecad04e32e00000d-900/.jpg http://static2.businessinsider.com/image/5053389b6bb3f7e36e000011-900/.jpg http://static1.businessinsider.com/image/5053389becad04242f00001d-900/.jpg http://static1.businessinsider.com/image/5053389ceab8ea492300000c-900/.jpg http://static2.businessinsider.com/image/5053389deab8eac32300000d-900/.jpg http://static6.businessinsider.com/image/5053389eeab8ea7828000000-900/.jpg Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 15, 2012 Share Posted October 15, 2012 Some interesting thoughts... ... Berkowitz puts around $80-90 per share only on the real estate alone. To me these numbers seem pretty conservative compared with the total market cap of Simons and their square footage. Anyway just some random thoughts... <snip>.... Bruce Berkowitz and Sears Holdings In the March 17, 2009 issue of Outstanding Investor Digest, Bruce Berkowitz made the following statement: “I think almost our entire portfolio is selling at a back-up-the-truck price.” With the benefit of hindsight, we know that Mr. Berkowitz was being interviewed almost exactly at the bear market lows but he didn’t know this at the time. However, he had confidence in his convictions and this was due to the depth of research underlying his fund’s positions. Sears Holdings was one of Fairholme’s largest positions in early 2009 and remains a large position today (click here for dataroma.com data on Fairholme’s history with Sears). What was Mr. Berkowitz’s investment thesis for Sears based on? In the Outstanding Investor Digest interview, he made it clear that the investment was based primarily on property values: ------ Last summer, we spent a tremendous amount of time going to all the tax collectors’ offices around the U.S. trying to get the tax value of Sears and Kmart properties — and we came up with numbers that ranged from between $80 and $90 per share. So, how much has it changed from last summer? And where is the stock today? And how much is the largest appliance servicer worth, or a large automotive center worth, or three or four brands, or Sears Canada and over $11 billion of inventories? It just doesn’t take a lot these days to get to the current market price …. So there are many ways to get to heaven. I think there are many ways that we will make money in Sears. Has our estimate of liquidation value declined in this environment? Yes, it has. But it’s still dramatically above where Sears is trading today. ----- ...</snip> Source: http://www.rationalwalk.com/?p=11736 Link to comment Share on other sites More sharing options...
hyten1 Posted October 15, 2012 Share Posted October 15, 2012 has anyone done any research/breakdown of the class of real estate shld possesses? simons are mostly class A I believe and that makes a difference. Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 15, 2012 Share Posted October 15, 2012 has anyone done any research/breakdown of the class of real estate shld possesses? simons are mostly class A I believe and that makes a difference. Nope,... Not yet Link to comment Share on other sites More sharing options...
BargainValueHunter Posted June 12, 2014 Share Posted June 12, 2014 New interview with Bruce Berkowitz: The 2014 Manager of the Year http://www.institutionalinvestor.com/Article/3350989/Asset-Management-Equities/Inside-the-Mind-of-Fairholme-Capitals-Bruce-Berkowitz.html#.U5nHL1P42uI Link to comment Share on other sites More sharing options...
brker_guy Posted June 12, 2014 Share Posted June 12, 2014 Very good article, BargainValueHunter... Link to comment Share on other sites More sharing options...
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