Fairholme Capital Sells AIG, BofA, Buys Sears Holdings

Fairholme Capital Sells AIG, BofA, Buys Sears Holdings
By Hedge Funds [CC BY 3.0], via Wikimedia Commons

Fairholme Capital Management filed its 13-F with the SEC today. The document, which deals with the company’s long holdings at the end of the third quarter, shows that its long portfolio was worth $8,441,166,000 on September 30, up from $7,691,263,000 at the end of the second quarter of 2013.

The filing showed some shuffling around at Fairholme by manager Bruce Berkowitz. Berkowitz appears to have been happy enough with his long portfolio through the third quarter, however. The manager sold a few thousand shares here and there, but made no substantive change to the make-up of his portfolio. Berkowitz didn’t buy into any new stocks or sell out of any positions during the third quarter of the year.

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Fairholme tinkers in third quarter

Though there was very little substantive change at Fairholme Financial in the third quarter, there was a good deal of tinkering with the portfolio. The firm sold 1,217,035 shares in American International Group Inc (NYSE:AIG) leaving it with 84,931,830 shares. It sold 1,251,900 shares in Bank of America Corp (NYSE:BAC) leaving it with 99,696,715 shares in the bank.

The only addition that Fairholme Financial made to its long portfolio in the third quarter was the purchase of 365,200 shares in Sears Holdings Corp (NASDAQ:SHLD). The purchase brings the company’s total ownership of Sears shares to 20,758,173. The third quarter was obviously a slow one with little movement on the long side for Fairholme, but there may have been other more pressing concerns for the company.

Berkowitz wants Freddie Mac and Fannie Mae

Perhaps the reason the Fairholme long portfolio changed so little during the third quarter was that Bruce Berkowitz was busy with other matters. News emerged today that Farholme was in the market for a government-sponsored enterprise or two. According to the plan that Fairholme released, investors in Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) would once again take hold of the mortgage businesses and risk their own money trying to reform them.

The plan would see Faiholme and other investors pay $52 billion in order to take control of the mortgage-backing financial institutions. The Federal government is currently looking for ways to wind down the two GSEs without causing trouble for the rest of the economy. The Fairholme plan might accomplish that, but the government has resisted the investment firm’s attempts to take hold of the companies before, and it may continue to do so.

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