Fairholme Capital Management's Bruce Berkowitz (Trades, Portfolio) recently added more shares of Sears Holdings Corp (SHLD, Financial) to his portfolio of 24 stocks, valued at $7.26 billion.
When choosing stocks for his portfolio, Berkowitz asks himself one question: "How can they die?" This value investor gravitates toward companies that he believes to be irreplaceable if they were to liquidate tomorrow, as well as undervalued stocks.
Throughout his career, Berkowitz has been challenged on his stock picks. 73.6% of his portfolio consists of stocks in the financial sector, so his interest in SHLD left some scratching their heads, wondering why he is so attracted to this company and keeps coming back for more.
"You look wrong until people agree with you," Berkowitz confidently says during an interview when asked about his stock selection.
Berkowitz increased his position in SHLD by 3.38% since the last period and currently owns 26,609,973 shares, valued at $643.5 million. The stock makes up 8.9% of his overall portfolio and 23.95% of the company's shares outstanding.
Sears was incorporated in Delaware as a specialty retail store. There are currently 1,980 full-line and specialty retail stores in the United States.
Berkowitz acknowledges the fact that the stock is not the best peforming, yet he touches on the potential it has is the Fairholme Fund's Second Quarter 2014 Shareholder Letter :
"Sears (SHLD, Financial) remains the Fund's least successfuk investment, yet has the highest potential based on our estimates of tangible values."
