Bruce Berkowitz cashed in his profits from MBIA Inc. (NYSE:MBI), a new amended 13G filing shows. His firm, Fairholme Capital Management reduced holdings in the the insurer to 1.2 percent , or 2,250,100 shares of the company, a massive cut from previous ownership in 31,425,820 shares which made up a 16.3 percent stake. Berkowitz’s Fairholme Capital was the second largest shareholder of MBIA after Warburg Pincus LLC which owns 474 million shares.
This big move comes after MBIA Inc. (NYSE:MBI) had gained 35 percent since the end of Q1, adding further to its multiyear rally. MBIA is down over 2.8 percent today. Till June 10, the insurer had gained 83 percent for the year. So roughly Fairholme has raked in a huge profit here, likely to the tune of $200 million, assuming the holding was sold at $14.50.
Berkowitz has been a long term holder of MBIA Inc. (NYSE:MBI) stock, he initiated a position in MBIA in July 2010 with an 11 percent stake. The bond insurer has risen 120 percent since July 1 2010, so Fairholme’s profits are likely much higher than our estimate.
Although Berkowitz has reduced and added to the MBIA holding alternatively since he bought it, the reductions have only been minor, ranging between 2 to 26 percent cuts. This recent selling of MBIA stock was a 93 percent reduction from the previous position. Fairholme has held positions in several financial companies, his major bets on American International Group Inc (NYSE:AIG), The St. Joe Company (NYSE:JOE) and in Federal National Mortgage Association (OTCBB:FNMA) and Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s preferred shares are well known.