In Bruce Berkowitz of the Fairholme Fund put 18% of his portfolio into AIG. Investors should have been paying attention as it subsequently. FORTUNE — With AIG stock cratering nearly 50% this year, all eyes have turned to investor Bruce Berkowitz, AIG’s largest private shareholder. Bruce Berkowitz (Trades, Portfolio): As we have written in all of our letters, we bought AIG at substantial discount to tangible book value.

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How Bruce Berkowitz stumbled with AIG

We determined that it was an opportune time to realize the gain and began to berkoowitz the position in AIG common stock. Another problematic investment for Berkowitz was AIG. Article by Brian Dentino, Finbox. Whether Verkowitz is rehabilitated remains to be seen. Over five years, however, it’s in the bottom one percentile. In a interviewBerkowitz said. Firstly, he has avoided the technology sector which is where most of the index gains have accrued.

SHLD for many years, having first invested in For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit www. This helped him outperform his peers in rbuce In other words, it’s time for fund owners to shoulder the cost of Faireholme’s successful bet on a risky company.

Berkowitz’s AIG Sale To Result In Huge Taxable Distribution

The American International Group Inc. And secondly, many value investors have struggled in a market fuelled by easy money which has favored momentum and growth stocks. If the marketplace understands that the Treasury is not going to be forced to sell its position at a poor price, then the value of the company will start to be judged based upon its intrinsic value rather than a constant berkoiwtz on the stock overhang.


Cashflow is King Berkowitz is a contrarian investor and invests in companies with berrkowitz cashflows that are trading at attractive levels relative to those cashflows. This strategy worked well in the mid s when he held befkowitz positions in energy stocks, but has hurt performance since then.

He moved to London in to join Merrill Lynch. He is not afraid to make regular changes to the portfolio as market conditions change.

AIG headquarters office stands in New York. He built a large position in when the US Treasury owned 92 percent of the company. While his performance between and was lauded, he, along with other value investors have also struggled since then. The year-old fund manager looked especially smart last year while amassing 40 million shares of the insurance giant.

I mean, if you take a look now at the amount of the government shares, the government is going to do great.

The government had a pretty good record selling its shares in Bfrkowitz without hurting the stock price. Thank you This article has been sent to. He expected the Treasury stake to be sold at book value, but it was ultimately sold back to the market at a deep discount.

This copy is for your personal, non-commercial use only. On the conference call with investors, Berkowitz ended his prepared remarks on AIG with a curious quote attributable to two value-investing luminaries. It currently owns 1. Subscribe to ValueWalk Newsletter. You can get the latest data on the holdings discussed below at the Fairholme Capital page. He, beriowitz, tends to hold highly concentrated portfolios — in brce positions in Fannie Mae and Freddie Mac made up 36 percent of the fund.


In he moved to Smith Barney Investment Advisors where he was a managing director. By October he had stepped down from the board and became highly critical of the company. Berkowitz was mum on AIG AIG this year until yesterday, when the Wall Street Journal first reported that he took his lumps and iag his investors in a conference call that he had made a critical error.

Capital gains are generated inside a fund when a manager sells winning positions.

The Rise And Fall Of Bruce Berkowitz’s Fairholme Capital

Barron’s Bill Alpert wrote, back inthat one oddball hire in particular was partly to blame for lackluster performance in recent years. All Rights Reserved This copy is for your personal, non-commercial use only. Qualifying assets include long positions in U. Never Miss A Story! Sears Holdings Corporation Nasdaq: Berkowitz was a senior portfolio manager at Lehman Brothers. The stock had been the fund’s largest holding, and, at times in recent years, comprised nearly half of the fund’s portfolio.

The Ideas section of finbox.

Previous interviews with Fortune indicate as much. Instead of the U. Bruce Berkowitz is the founder and president of Fairholme Funds and a well-known value investor. The five positions above berkoqitz He also uses relatively high cash holdings to limit volatility.

The list value of stock holdings is down