BargainValueHunter Posted March 8, 2011 Share Posted March 8, 2011 Sold all my shares on the simply incredible popularity gain and nearly inconceivable invicible status this man has achieved. I've brought up the fact here at COBAF that his growing "myth" and media appearances worry me as an investor. I respect your right to sell out but why would you sell based on exterior circumstances he can do little to control vs. his style of investing, which as far as I can tell, hasn't changed? ??? Link to comment Share on other sites More sharing options...
Guest dealraker Posted March 8, 2011 Share Posted March 8, 2011 Pay close attention as there are a bunch of changes going on at Fairholme. More funds; size going parabolic; successful bunch of the support staff left; escaping to the hot summer cold winter Florida panhandle via a trust fund for insiders (St. Joe); media, media, and more media; citing government as a reliable investigator analyzer of business; etc. The Fairholme of the past is rapidly changing and so is Berkowitz. We shall see. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted March 8, 2011 Share Posted March 8, 2011 http://www.theatlantic.com/magazine/archive/2011/04/showdown-in-the-sunshine-state/8417/ SummerCamp Beach was one of the places David Einhorn had highlighted in a 139-slide PowerPoint presentation before the New York Value Investing Congress in October. Einhorn spent an hour pounding home his argument that the company was grossly overvaluing the real-estate assets on its balance sheet. St. Joe Company had more than half a million acres of land, which it valued at about $750 million. And it derived most of that value from the 41,000 acres for which the company has development rights. In fact, three St. Joe developments that still have many unsold lots, including SummerCamp Beach, account for almost $300 million of the company’s book value. But Einhorn thinks the real value of that land might be more like $40 million. His target value for the company is $7 to $10 per share, mostly from the rural land that the company is slowly selling off to fund its development operations. When he took the podium, the stock was trading around $24. And as had happened before when Einhorn had given one of his little talks, the effect was rather electric: St. Joe’s stock dropped almost 20 percent over the next couple of days. And yet, places like SummerCamp Beach are exactly the future that Bruce Berkowitz is betting on. Berkowitz runs a nondiversified mutual-fund company, not a hedge fund, which means he doesn’t sell stocks short, just buys and holds them. He’s so good at it that Morningstar named him its domestic-stock-fund manager of the decade for the 2000s; he generated returns of 13.2 percent when the category average was pretty much zero. And he has bought and held quite a lot of St. Joe Company. Where Einhorn sees worthless pine trees, Berkowitz apparently sees a happy vision of the houses that will one day stand in their place.[/Quote] Link to comment Share on other sites More sharing options...
benhacker Posted March 8, 2011 Share Posted March 8, 2011 I respect your right to sell out but why would you sell based on exterior circumstances he can do little to control vs. his style of investing, which as far as I can tell, hasn't changed? ??? I have nothing to say if you think his style of investing hasn't changed. He's good, really good, and if I had to pick the top ten managers I'd like to have my money, he'd be on it, but as someone who invested with him early, it's obvious to me his assets size has changed his perspective quite a bit. Sure he still looks for "value", but everything else seems pretty different. As a disclosure, I sold in early '10 due to his refusal to shut his fund which I knew would force him to change his style... Ben Link to comment Share on other sites More sharing options...
BRK7 Posted March 8, 2011 Share Posted March 8, 2011 Just a thought for those who are considering selling their FAIR stake: you might consider holding on to a nominal amount. If you sell 100% of your stake and FAIR subsequently closes to new investors, your assessment of the situation could change. If you decide you'd like like to re-enter FAIR, you wouldn't be able to. However, existing fund investors may be able to add materially to their positions. Just a way of keeping your options open, if you do sell. Whether to sell is another question. Link to comment Share on other sites More sharing options...
jtvalue Posted March 8, 2011 Share Posted March 8, 2011 I understand your concerns as a FAIRX shareholder and have to admit that I share them as well. However, I also agree with Bruce that the large cap banks are where the opportunity lies today and he could easily put his $20 bil to work in the likes of a BAC, C, GS, etc. Looking at BAC's analyst day comments today, the share look to be trading at 5-6x normalized earnings with signficant excess capital to boot. Once the large cap banks become more fairly valued he will have a big problem of where to re-invest the proceeds but I believe we are a long ways off from that. Link to comment Share on other sites More sharing options...
Mungerville Posted March 8, 2011 Share Posted March 8, 2011 Is he in the same league as Seth Klarman? My feeling is "no". Klarman's ideas just seem so much more compelling. Link to comment Share on other sites More sharing options...
txlaw Posted March 9, 2011 Share Posted March 9, 2011 Pay close attention as there are a bunch of changes going on at Fairholme. More funds; size going parabolic; successful bunch of the support staff left; escaping to the hot summer cold winter Florida panhandle via a trust fund for insiders (St. Joe); media, media, and more media; citing government as a reliable investigator analyzer of business; etc. The Fairholme of the past is rapidly changing and so is Berkowitz. We shall see. Pay close attention as there are a bunch of changes going on at Fairholme. More funds; size going parabolic; successful bunch of the support staff left; escaping to the hot summer cold winter Florida panhandle via a trust fund for insiders (St. Joe); media, media, and more media; citing government as a reliable investigator analyzer of business; etc. The Fairholme of the past is rapidly changing and so is Berkowitz. We shall see. Wow, that's quite a pessimistic assessment of Berkowitz. Let me address a couple of your comments. Nearly inconceivable invicible status; media, media, and more media -- Not sure this is the case. His exposure has definitely skyrocketed, but I don't think people think he is invincible. On the contrary, everyone appears to believe he is crazy for picks like AIG, MBIA, and JOE. If you think it's a bad idea for him to appear so frequently in the spotlight, I would suggest that this has been helpful to FAIRX shareholders, who get a better understanding of the rationale behind his investments -- if they read between the lines. More funds; size going parabolic -- Yup. No question that this will affect how he can deploy capital, but I still expect that he can achieve at least low teen returns over time with his current AUM. His investment mind is one of the best out there. He's one of the few people who can practice focus investing on par with the best, but he can't really be that focused running a mutual fund. Successful bunch of the support staff left -- This concerned me as well, and I still haven't gotten a good answer about whether they left on good or bad terms. On the one hand, the name of the new group (GoodHaven) could be a good sign, indicating that they are spin offs, sort of like the Tiger Cubs. On the other hand, perhaps they left for other reasons that are not so good. I wish someone in the know would chime in here. Escaping to the hot summer cold winter Florida panhandle via a trust fund for insiders (St. Joe) -- ??? Could you please elaborate on your theory here? Citing government as a reliable investigator analyzer of business -- I believe the point Berkowitz is making is that the government has had the opportunity to audit many of the black box financials that are now in the portfolio and that it is very unlikely that these companies would have been taken off life support if government officials did not believe that the capital positions of these still TBTF companies were now okay compared to during the financial crisis. Link to comment Share on other sites More sharing options...
txlaw Posted March 9, 2011 Share Posted March 9, 2011 Is he in the same league as Seth Klarman? My feeling is "no". Klarman's ideas just seem so much more compelling. Margin of Safety is a great book, and Klarman is one of the best. But I don't think Klarman is as good as Berkowitz is at analyzing businesses. Link to comment Share on other sites More sharing options...
Guest dealraker Posted March 9, 2011 Share Posted March 9, 2011 I made a large investment with Berkowitz in the year 2000. Can't help but wonder what responses I'd have gotten had I written about that committment back then. Cisco maybe? Well, we will see. The story should be a good one. Still have 20% left with Bruce. 25% of my net worth is in Greewald's favorite industry: Railroads! Link to comment Share on other sites More sharing options...
txlaw Posted March 9, 2011 Share Posted March 9, 2011 I made a large investment with Berkowitz in the year 2000. Can't help but wonder what responses I'd have gotten had I written about that committment back then. Cisco maybe? Well, we will see. The story should be a good one. Still have 20% left with Bruce. 25% of my net worth is in Greewald's favorite industry: Railroads! Please. You're giving people on this board no credit. I'm still curious about the comment about "escaping to the hot summer cold winter Florida panhandle via a trust fund for insiders (St. Joe)." Where did that come from? And why do you still have money invested with him given the comments you made? Link to comment Share on other sites More sharing options...
turar Posted March 9, 2011 Share Posted March 9, 2011 Wow, a whole article in The Atlantic devoted to the issue: http://www.theatlantic.com/magazine/print/1969/12/showdown-in-the-sunshine-state/8417/ Link to comment Share on other sites More sharing options...
BargainValueHunter Posted March 29, 2014 Share Posted March 29, 2014 http://www.gurufocus.com/news/253216/bruce-berkowitz-leads-returns-for-first-quarter-with-bet-on-fannie-mae-freddie-mac Bruce Berkowitz still has almost 42% of his Fairholme Fund (FAIRX) in American International Group Inc. (AIG), a holdover from his massive bet on U.S. financials post-economic crisis. As of year-end, he also holds massive stakes in his new venture, national home mortgage entities Fannie Mae (FNMA) (20 million common shares and 66 million preferred shares) and Freddie Mac (FMCC) (52 million preferred shares). The average gain of the new positions is the highest of all investors tracked by GuruFocus over the past six months, beating out those of Robert Karr, FPA Capital Fund and Seth Klarman, who come after with him double-digit gains. In the past half-year, the Fairholme Fund’s new positions have advanced 69.67%, while all of Bruce Berkowitz’s new stocks went up 44.24%. Link to comment Share on other sites More sharing options...
frith2012 Posted March 29, 2014 Share Posted March 29, 2014 anybody have a link to the article where Greenwald discusses the competitive positioning of railroads? I don't remember hearing him discuss this. Thanks. Link to comment Share on other sites More sharing options...
cubsfan Posted March 29, 2014 Share Posted March 29, 2014 anybody have a link to the article where Greenwald discusses the competitive positioning of railroads? I don't remember hearing him discuss this. Thanks. Do you mean all this? http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/bruce-greenwald-buffett-has-lost-his-mind/ Link to comment Share on other sites More sharing options...
BargainValueHunter Posted December 2, 2016 Share Posted December 2, 2016 Yes, this is an old thread but given the incredible 10% plus gain yesterday in FAIRX (and how often do you see unlevered, high cash, multi-sector, mutual funds gain 10%+ in a single trading day?) I figured it would be interesting to look back at the last time Berkowitz outperformed. The thread title is eerily apropos. I've never seen such an up or down manager. If you are very, very patient I suppose Buffett's mantra of "We prefer a lumpy 15% return to a smooth 12% return" becomes a guiding light with Berkowitz running your capital! Link to comment Share on other sites More sharing options...
Jurgis Posted December 2, 2016 Share Posted December 2, 2016 Seriously, he almost completely blew up. Maybe you could argue it's OK to invest with him for a lumpy 15% but not in mutual fund format. He could have been forced to close the shop. Link to comment Share on other sites More sharing options...
sampr01 Posted December 2, 2016 Share Posted December 2, 2016 Seriously, he almost completely blew up. Maybe you could argue it's OK to invest with him for a lumpy 15% but not in mutual fund format. He could have been forced to close the shop. Lucky for SHLD shareholders. If FNMA works for him and his investors will show patience for at least 2-3 years. Link to comment Share on other sites More sharing options...
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