Bruce Berkowitz Discusses His Massive Commitment to Four Financials

By on September 27, 2014

Bruce Berkowitz - Fairholme FundConsuelo Mack, host of Wealthtrack, recently interviewed Bruce Berkowitz, manager of the Fairholme fund. Berkowitz explained why nearly 80% of his fund is allocated to four financial stocks, led by AIG and Bank of America.

Berkowitz estimated the book value of AIG to be $75, which he also viewed as its liquidation value. He has pared back the position incrementally as the price has risen.

Berkowitz explained that Bank of America (BAC) sells well below its liquidation value.

Berkowitz discussed his other two large financial holdings and government sponsored enterprises; Fannie Mae (FNMA) and Freddie Mac (FMCC), who he said were fabulously profitable now. It was mentioned that he holds preferred shares in the mortgage behemoths.

Regarding questions raised about his concentrated positions, Berkowitz justified the large holdings as being in his “circle of competence.”

Back in September 2013, Berkowitz was on CNBC discussing his large AIG holding and his position in Sears Holdings (SHLD) which he considered a cheap alternative to more expensive REITs [link].

One Comment

  1. Jonathan Friedman

    September 28, 2014 at 3:40 pm

    I wish they had mentioned how he viewed SHLD now that it has experienced a troubled period. BB must have dumped it at a loss.

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