Fairholme Fund run by Bruce Berkowitz just released their year end letter. To say Bruce Berkowitz had a bad year is an understatement. Not only did the fund drop by more than 32%, but assets under management (aum) also dropped from ~$23B to $7B; that is a 70% drop in assets! Even John Paulson who lost 47% in 2011, did not see such a drastic decline in aum.
The five year annual return is now -1.42%.
Bruce Berkowitz’s largest stake was in Government controlled, AIG. The stock was down ~40%. The stock makes up over 23% of Berkowitz’s Fairholme Fund.
The second largest holding, AIA, in contrast was only down ~16%.
Sears, the largest non-financial holding was doing okay but got slaughtered by investors at the very end of the year. The stock was down 60%, and was also a big loser for legendary hedge fund manager, Eddie Lampert.
Brookfield Asset Management, which made up 8% of Fairholme’s portfolio was down 14%.
Bank of America, which Berkowitz was particularly bullish on, was down ~54%.
The list goes on and on, but we will save readers the gory details. Lesson as we mentioned several times is, never allocate 90% of your portfolio to one sector, especially one like financials. Financials are both volatile and have extremely complex balance sheets.
Full stat sheet below in scribd: