The investment portfolio of Fairholme Capital Management’s Bruce Berkowitz is an interesting one, revealing the billionaire’s penchant for options, calls and puts. As of Q4 2013, Berkowitz’s fund had 45 allocations, of which only 14 are common stocks. The remaining 31 are options. And of the common stocks in Berkowitz’s fund, 10 belong to the financial sector, revealing another point of emphasis for the investor.
Bruce Berkowitz’ New Acquisitions
Bruce Berkowitz made only one purchase of company shares during the fourth quarter of 2013: Federal Home Loan Mortgage Corp (OTCBB:FMCC), better known as Freddie Mac. The investor picked up 19.4 million FMCC shares, which are currently traded over-the-counter. The company now composes 0.58% of his fund.
GrizzlyRock Value Partners was up 16.6% for the first quarter, compared to the S&P 500's 5.77% gain and the Russell 2000's 12.44% return. GrizzlyRock's long return was 22.3% gross, while its short return was -2.9% gross. Compared to the Russell 2000, the fund's long portfolio delivered alpha of 10.8%, while its short portfolio delivered alpha Read More
Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. Although the company was severely affected by the 2008 recession and subsequently put into government conservatorship, it has benefited greatly from the housing market’s rebound. Share prices are up +59.31% YTD and +266.67% since the start of the fourth quarter of last year.
Bruce Berkowitz’s Increased Positions
Berkowitz increased his positions in Bank of America Corp (NYSE:BAC), which now represents 15.99% of his fund, Sears Holdings Corp (NASDAQ:SHLD), now at 10.77% and iBillionaire Index constituent Chesapeake Energy Corporation (NYSE:CHK), at 0.26%.
The billionaire’s purchase with Bank of America should not come as a surprise. Shares have rallied +18.92% since the beginning of Q4 2013 and are up +6.17% in 2014. In comparison, Citigroup Inc (NYSE:C), Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) are up +0.25%, +12.33% and 9.92% since October 1st and have generally struggled this year. George Soros joins Berkowitz as a Bank of America investor.
Sears and Chesapeake have had a rough go in 2014, down -8.75% and -4.53% YTD. Sears, however, has begun to recover as the effects of strategy changes are being reflected in results. Sears is an Edward Lampert bet, while Chesapeake is trusted by Carl Icahn and Ray Dalio.
Bruce Berkowitz’s Decreased Positions
Bruce Berkowitz trimmed his stakes in American International Group Inc (NYSE:AIG), Leucadia National Corp. (NYSE:LUK), The St. Joe Company (NYSE:JOE) and Berkshire Hathaway’s Class B Shares (NYSE:BRK.B).
The largest and most important change came with AIG, of which the billionaire sold off five million shares. He still holds over 79 million assets, AIG being his most significant allocation at 41.91%. The company’s share price has declined a slight -2.51% YTD and is one of the top holdings of the iBillionaire Index, as Daniel Loeb, Leon Cooperman, David Tepper and Richard Chilton continue to bet on its ability to deliver.
Bruce Berkowitz’s Sold Out Positons
Bruce Berkowitz did not cash out of any of his positions during the fourth quarter of 2013.
Here’s a full look at the billionaire’s Q4 picks: