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Fairholme Doubles Down on Financials

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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 http://www.gurufocus.com. 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.

Ticker Company Industry Shares Value ($1000) % Weighting as of
Share # Change
from Last Period
Trade Impact to Portfolio (%) Fairholme Doubles Down on Financials
Holding History
AIG American International Group Inc. Insurance 44,198,015 1,553,120 10.76% -0.2% 0 History
SHLD Sears Holdings Corp. Retail 16,313,973 1,348,350 9.34% +9.36% +0.8% History
BAC Bank of America Corp. Banks 92,648,715 1,235,010 8.55% +0.55% +0.05% History
C Citigroup Inc. Banks 25,844,260 1,142,320 7.91% +8.98% +0.65% History
MS Morgan Stanley Financial Services 38,891,300 1,062,510 7.36% +0.8% +0.06% History
GS The Goldman Sachs Group Inc. Financial Services 6,702,300 1,062,110 7.36% +13.81% +0.89% History
RF Regions Financial Corp. Banks 124,035,304 900,496 6.24% -0.34% 0 History
BAM Brookfield Asset Management Financial Services 27,500,000 892,650 6.18% New Buy +6.18% History
CIT CIT Group Inc. Financial Services 19,862,429 845,146 5.85% -0.67% 0 History
LUK Leucadia National Corp. Insurance 18,830,881 706,911 4.9% -0.93% 0 History
Fairholme Doubles Down on Financials

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