Berkowitz Seeking Patient Capital Sours on Mutual Funds – Bloomberg 02-04-13

Salient to Investors:

Bruce Berkowitz at Fairholme Capital Mgmt said mutual funds are great vehicles but have rules that allow mutual fund holders to cash out anytime and puts his long-term investing style at a disadvantage, and hurts managers who favor concentrated positions. Berkowitz said he is prone to investing too early in stocks he thinks will recover – looks at cash assets, intrinsic value of the company and the price.

Berkowitz’s flagship Fairholme Fund’s worst year ever in 2011 led to an almost 60 percent drop in assets in the 2 years ended Nov. 30, despite the fund’s best performance versus the S&P 500 Index in a decade in 2012.

Morningstar named Berkowitz the domestic-stock fund manager of the decade in January 2010.

Kevin McDevitt at Morningstar said daily redemptions are a huge burden for money managers, especially ones like Berkowiz who make big bets on a few stocks.

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Berkowitz Seeking Patient Capital Sours on Mutual Funds

Berkowitz’s Returns Rise From Worst to First as AIG, BofA Rally – Bloomberg 11-26-12

Salient to Investors:

Bruce Berkowitz at Fairholme Fund bets on the recovery of stocks that fall out of favor, especially recovering icons that trade at half of intrinsic value for reasons that have nothing to do with their prospects. Berkowitz prefers to focus on his best ideas rather than spread them out.

Morningstar named Berkowitz as the US domestic stock-fund manager of the decade in 2010, who claims his fund returned an annualized 9.6 percent since inception at the end of 1999 through 2011 versus a gain of less than 1 percent a year for the S&P 500.

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