Fairholme’s Bruce Berkowitz has published his semi-annual report for 2010. It contains a letter from himself to his shareholders. Here is an excerpt from his letter pertaining to his holdings:
Read the letter in full:
FairholmeFunds2010semi
In case you do not know this already, GuruFocus is dedicated to track Bruce Berkowitz’s stock holdings, together with that of 70+ other investing Gurus. To see Berkowitz’s stock picks and portfolio, click: http://www.gurufocus.com/holdings.php?GuruName=Bruce+Berkowitz
Over one-half of The Fairholme Fund’s assets are invested in securities of mostly hated financial services and real estate related companies. After all, “there is no job growth without economic growth; no economic growth without access to credit; no access to credit without a stable, functioning financial system.” Financials tend to lead markets into and then out of recessions followed by asset deflation and then inflation. Never being 100% certain as to events and timing, approximately 20% of the Fund’s assets are in relatively, short-maturity corporate debt and cash equivalents.
Over one-third of The Fairholme Focused Income Fund is invested in short-term credits of American International Group, Inc. (“AIG”), General Growth Properties,Inc. (“GGP”) and others that are perceived to be or are in actual financial stress. Underlying equities lead us to believe that all are “money good.” Nearly two-thirds of the Fund is invested in cash and what we consider to be cash equivalents.
You should also note our large and growing debt and equity holdings of AIG and GGP. Like their industry brethren, both were in critical condition from last year’s credit freeze and both appear to be thawing from near-death experiences. We believe a moderate climate will allow AIG to repay U.S. taxpayers and GGP to emerge from its self-induced bankruptcy. Further, Fairholme Funds has agreed to buy new GGP trust shares, subject to numerous terms and conditions.
Portfolios are positioned for today’s nascent recovery with its fits and starts. Don’t Lose remains Rule #1 as we strive to be greedy when most remain fearful about the future.
Read the letter in full:
FairholmeFunds2010semi
In case you do not know this already, GuruFocus is dedicated to track Bruce Berkowitz’s stock holdings, together with that of 70+ other investing Gurus. To see Berkowitz’s stock picks and portfolio, click: http://www.gurufocus.com/holdings.php?GuruName=Bruce+Berkowitz
