Fairholme Doubles Down on Financials

Fairholme Doubles Down on FinancialsAs 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 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.

TickerCompanyIndustrySharesValue ($1000)% Weighting as of
Share # Change
from Last Period
Trade Impact to Portfolio (%)Fairholme Doubles Down on Financials
Holding History
AIGAmerican International Group Inc.Insurance44,198,0151,553,12010.76%-0.2%0History
SHLDSears Holdings Corp.Retail16,313,9731,348,3509.34%+9.36%+0.8%History
BACBank of America Corp.Banks92,648,7151,235,0108.55%+0.55%+0.05%History
CCitigroup Inc.Banks25,844,2601,142,3207.91%+8.98%+0.65%History
MSMorgan StanleyFinancial Services38,891,3001,062,5107.36%+0.8%+0.06%History
GSThe Goldman Sachs Group Inc.Financial Services6,702,3001,062,1107.36%+13.81%+0.89%History
RFRegions Financial Corp.Banks124,035,304900,4966.24%-0.34%0History
BAMBrookfield Asset ManagementFinancial Services27,500,000892,6506.18%New Buy+6.18%History
CITCIT Group Inc.Financial Services19,862,429845,1465.85%-0.67%0History
LUKLeucadia National Corp.Insurance18,830,881706,9114.9%-0.93%0History