As Bruce Berkowitz intensifies his bet on the financials sector, risk-averse investors may want to steer clear, say Morningstar’s Ryan Leggio and Kevin McDevitt (who both spoke to Berkowitz recently). Fairholme’s fund now has very little cash, however, since the end of May Berkowitz has built up more cash. He did this as a result of lots of cash leaving the portfolio. Berkowitz’s portfolio has become much more concentrated. Kevin thinks that Fairholme is not appropriate for risk adverse investors anymore. It might be a small holding, but the fund is too concentrated in financials to be comfortable if one is risk adverse.
In Berkowitz’s focused income fund the equity stake has grown from zero to 25% within a few months even though this is a bond fund. Berkowitz is doing this because yields are so low in corporate bonds.
Berkowitz’s top holdings from http://www.gurufocus.com. With the exception of Sears, all the top holdings are in financials, which now makes up 80% of Fairholme’s flagship fund. Video is below the chart.
|Ticker||Company||Industry||Shares||Value ($1000)||% Weighting as of|
|Share # Change|
from Last Period
|Trade Impact to Portfolio (%)|
|AIG||American International Group Inc.||Insurance||44,198,015||1,553,120||10.76%||-0.2%||0||History|
|SHLD||Sears Holdings Corp.||Retail||16,313,973||1,348,350||9.34%||+9.36%||+0.8%||History|
|BAC||Bank of America Corp.||Banks||92,648,715||1,235,010||8.55%||+0.55%||+0.05%||History|
|MS||Morgan Stanley||Financial Services||38,891,300||1,062,510||7.36%||+0.8%||+0.06%||History|
|GS||The Goldman Sachs Group Inc.||Financial Services||6,702,300||1,062,110||7.36%||+13.81%||+0.89%||History|
|RF||Regions Financial Corp.||Banks||124,035,304||900,496||6.24%||-0.34%||0||History|
|BAM||Brookfield Asset Management||Financial Services||27,500,000||892,650||6.18%||New Buy||+6.18%||History|
|CIT||CIT Group Inc.||Financial Services||19,862,429||845,146||5.85%||-0.67%||0||History|
|LUK||Leucadia National Corp.||Insurance||18,830,881||706,911||4.9%||-0.93%||0||History|