Bruce Berkowitz’s Fairholme Fund Dumps Entire CIT Stake

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Bruce Berkowitz, manager of Fairholme Fund has investments in eight stocks with approximately $5.69 billion market value based on its latest filing with the Securities and Exchange Commission (SEC) for the first quarter of 2013. The top three largest stockholdings of Bruce Berkowitz were American International Group (NYSE:AIG) at more than 80.2 million shares worth over $3.05 billion, Bank of America Corp (NYSE:BAC) with over 81.6 million shares and approximately $916.4 market value, and Sears Holdings Corp (NASDAQ:SHLD) with more than 14.2 million shares worth over $639.5 million.

Bruce Berkowitz’s Fairholme Fund Dumps Entire CIT Stake

Its five other equity investments include The St. Joe Company (NYSE:JOE), at more than 23 million shares worth approximately $500.46 million, Leukadia National Corporation (NYSE:LUK), over 12.2 million shares with more than $328.9 million market value, and MBIA Inc. (NYSE:MBIA) holding more than 20.5 million shares worth approximately $198.2 million. The mutual fund also owns more than 6 million shares of Sears Canada Inc (PINK:SEARF) worth over $55.8 million, and 592,993 shares of Orchard Supply Hardware Stores Corp (NASDAQ:OSH) with approximately $2.7 million market value.

Bruce Berkowitz sold out of his stockholdings (6,068,829 shares) in CIT Group Inc. (NYSE:CIT) during the first quarter of 2013.

In 2012, Fairholme Fund delivered a gain of 35.85 percent compared with 16 percent gain of the S&P 500 Index. Its performance over the past five years was 12.55 percent and 159.97 percent over the past ten years. The S&P 500 Index’s performances over the past five and ten years were 8.59 percent and 98.58 percent respectively.

In his letter to investors last January, Bruce Berkowitz told investors that a $10 investment in the fund since its inception has grown to $40.65 after expenses and assuming reinvestments of distribution. According to him, the Fund’s average rolling 5-year return was 71.22 percent and he pointed out that its performance beat the S&P 500 index in 94 out of 97 5-year periods.

Berkowitz told investors that Fairholme Fund is “bullish on America” and he is confident that American companies are capable of generating reasonable returns on equity. According to him, the United States is in its fourth year of recovery, housing prices are increasing but it still needs to reach replacement value. He also noted that the unemployment rate in the country is starting to decline, and interest rates remain at a record low.

Bruce Berkowitz said that Fairholme Fund is highly focused on five companies, which represent 80 percent of its net assets.

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