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Bruce Berkowitz is the founder, and the managing member of the Fairholme Fund, which has $18.3 billion in assets. Morningstar named Berkowitz as the Domestic-Stock Fund Manager of the Decade. Prior to forming Fairholme Capital Management, Berkowitz was the Managing Director of Smith Barney. Berkowitz is a contrarian investor who loves distressed companies. Fairholme’s famous motto is “Ignore the crowd”. According to the latest 13F file from I-Metrix Edgar Online, Berkowitz holds 26 positions, 62.84% of which is invested in financial companies. Here, is a list of his favorite equity holdings with a brief summary of the top 10.

Company Name

Ticker

$ Market Value

% ∆ in Shares

% of TSO

YTD Return

GENERAL GROWTH

GGP

1,810

NEW!!!

11.78

3.58%

AMERICAN INTL

AIG

1,424

34.57%

2.46

-33.39%

SEARS HLDGS

SHLD

1,228

1.75%

13.76

11.59%

BANK OF AMERICA

BAC

1,134

30.37%

0.91

-7.65%

CITIGROUP

C

1,079

-1.77%

0.81

-3.81%

MORGAN STANLEY

MS

1,022

6.16%

2.5

-2.50%

GOLDMAN SACHS

GS

904

-2.01%

1.14

-8.52%

REGIONS FINANCIAL

RF

892

73.52%

9.91

2.58%

CIT GROUP

CIT

844

29.49%

9.97

-10.40%

LEUCADIA NATL

LUK

708

-1.36%

7.77

27.72%

ST JOE CO

JOE

673

0.06%

29.02

15.06%

BERKSHIRE H.

BRK.B

564

44.36%

0.65

2.69%

BERKSHIRE H.

BRK.A

497

0.00%

0.43

2.81%

MBIA

MBI

419

19.70%

19.24

-9.17%

SPIRIT AERO

SPR

416

-10.73%

14.9

15.14%

GENERAL ELECTRIC

GE

318

10.82%

0.15

9.86%

AT&T INC

T

288

NEW!!!

0.16

7.46%

VERIZON

VZ

273

NEW!!!

0.26

5.85%

RSC HOLDINGS

RRR

201

-2.51%

14.11

41.07%

WELLCARE

WCG

150

-38.82%

8.39

38.75%

BANCO SANTANDER

STD

56

NEW!!!

0.06

16.65%

WINTHROP

FUR

29

-30.28%

7.77

-6.42%

ROYAL DUTCH SHELL

RDS.A

13

NEW!!!

0.01

12.29%

HUMANA

HUM

1

-99.76%

0

32.15%

TAL INTL

TAL

0

NEW!!!

0

19.26%

American International Group, Inc. (AIG): AIG is one of the largest international insurance organizations, serving customers in more than 130 countries. AIG has a market cap of $57.78 billion and a trailing P/E ratio of 2.28. However, forward P/E ratio is 11.17. Berkowitz has been bullish on the stock and increased his holdings by 36.7% in the last quarter of 2010. The company had EPS growth of -28.68% over the last five years, with a profit margin of 15.62%. However, AIG has estimated EPS growth of 9.33% over the next five years. AIG was one of the companies hit worst by the Japanese tsunami. The stock has been beaten-down in 2011 by 33%. $30 forms a strong resistance level for the stock. It is possible to see a bounce back if the stock does not fall below that resistance.

General Growth Prosperities Inc. (GGP): General Growth Properties is a self-managed real estate investment trust [REIT]. GGP’s business is focused on two main areas: Retail and master planned communities. The retail business includes the operation, development and management of retail and other rental property, primarily shopping centers. The master planned communities segment develops and sells land for residential, commercial and other uses. GGP has a market cap of $15.36 billion, and a P/E ratio of 15.12. GGP is a high-growth company which enjoyed an annualized EPS growth of 18.46% over the last five years. Analysts expect GGP to by 5.9% over the next five years. The company has a dividend policy and offered 2.51% yield last year. Fairholme owns 11.78% of the company.

Bank of America Cooperation (BAC) : Bank of America Corporation is a bank holding company. BAC is one of the largest financial institutions, serving individual consumers, small and middle market businesses, corporations and state governments. BAC has large market cap of $124.59 billion and a forward P/E of 6.69. Its forced engagement with Merrill Lynch has not worked well so far. The company had EPS growth of -37.15% over the last five years, with a profit margin of -2.03% raising questions about the financial health. Analysts estimate BAC to support an EPS growth of 8.50% over the next five years. What is the least desirable about Bank of America is the tremendous amount of goodwill and other intangibles in its inflated balance sheet.

CitiGroup Inc. (C): Unlike Bank of America, Citigroup Inc. is a truly global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services. As of December 31, 2010, Citigroup has approximately 200 million customer accounts serving in more than 160 countries. Citi supports a large market cap of $132.49 billion. The company trades with a trailing P/E ratio of 12.64, and a forward P/E of 8.58. While the EPS growth rate was –37.85% in the last five years, analysts have optimistic estimations about the future. Citi is not just a U.S.-based company. Citi’s investments in emerging markets will surely benefit the company long-term. The recent beat-down is a good opportunity to dive in for those interested.

Sears Holdings Corporation (SHLD): Sears Holdings is the parent company of Kmart Holding Corporation (Kmart) and Sears, Roebuck and Co. The Company is a broad-line retailer with specialty retail stores in Canada operating through Sears Canada, a 73%-owned subsidiary. While Sears was the giant retailer monopoly of the last century, Wal-Mart changed the game. Sears has a much smaller market cap of $8.92 billion compared with its gigantic competitor Wal-Mart (WMT) [$186 billion]. Sears is still suffering from mismanagement. Sears doesn't have a dividend policy. The extremely high P/E ratio of 66.97 and even higher forward P/E of 72.83 supports the mismanagement thesis. The company had annualized EPS growth of -28.03% over the last five years, with a miserable profit margin of 0.35%. Whether analysts’ EPS growth estimate of 10.00% over the next five years will hold or not, depends on the Berkowitz effect. The investment guru owns 13.76% of Sears Holdings.

Morgan Stanley (MS): Morgan Stanley is a global financial services firm. Through its subsidiaries and affiliates, Morgan Stanley provides its products and services to clients which include corporations, governments, financial institutions, as well as individuals. Similar to Citigroup (C), Morgan Stanley is a global financial services firm. The Company operates in three segments: Institutional Securities, Global Wealth Management and Asset Management. MS has a market cap of $41.02 billion and supports a relatively low P/E ratio of 11.52, and a forward P/E of 8.49. The company had EPS growth of –4.18% over the last five years. Net profit margin is 14.36%. Analysts expect an annualized EPS growth of 11.25% over the next five years. The company supports a dividend yield of 0.76%.

The Goldman Sachs Group, Inc. (GS): The Goldman Sachs Group is another bank holding company which provides global investment banking, securities and investment management services. The Company provides a range of financial services to customers, including corporations, financial institutions, governments and high-net-worth individuals. It operates in three segments: Investment Banking, Trading and Principal Investments and Asset Management and Securities Services. GS has a market cap of $79.90 billion. Trailing P/E ratio is 11.66, and a forward P/E is 8.15. Goldman Sachs strongly suffered from the last crisis. The company had an EPS growth of -10.33% in the last five years. However, last year’s profit margin was 18.17%. Analysts estimate GS could support an EPS growth of 5.50% over the next five years. The company has a dividend policy of 0.91%.

CIT Group Inc. (CIT): CIT Group Inc. (CIT) is a bank holding company, which provides commercial financing and leasing products, and management advisory services to clients in a variety of industries. CIT bank is its primary bank subsidiary. It serves clients in a variety of industries, including transportation, aerospace and rail, manufacturing, wholesaling, retailing, healthcare, communications, media and entertainment industries. CIT has a market cap of $8.46 billion, a P/E ratio of 16.36, and a forward P/E of 20.29. Net profit margin is 8.19%. The company had EPS growth of -10.33% over the last five years, where analysts estimate an annualized EPS growth of 11.17% over the next five years. The company doesn't have a dividend policy. Berkowitz owns 9.97% of the distressed company.

Regions Financial Corp. (RF): Regions Financial is a financial holding company which provides traditional commercial, retail and mortgage banking services, as well as other financial services in the field of investment banking. RF has a market cap of $9.02 billion and a forward P/E of 12.36. The company had EPS growth of -50.94% over the last five years, with a profit margin of -7.74%. Analysts estimate RF to support an EPS growth of 8.00% over the next five years. The company has a dividend policy of 0.56%. Berkowitz loves distressed companies and own 9.92% of RF as of the last quarter.

The St. Joe Company (JOE): The St. Joe Company is a real estate development company engaged in town and resort development, commercial and industrial development, and rural land sales. It also has interests in timber. The Company operates in four segments: Residential Real Estate, Commercial Real Estate, Rural Land Sales and Forestry. JOE has a market cap of $2.32 billion. The company had EPS growth of -44.81% over the last five years, with a profit margin of -36.07%. The company doesn't have a dividend policy. Fairholme owns 29% of the St. Joe Company. Analysts estimate JOE to support an EPS growth of 15% over the next five years. However, given Fairholme Capital’s outstanding record to beat the market, Berkowitz can turn the company into a profit machine. One might want to keep an eye on St. Joe Company.



Disclosure: I am long C.

Source: A Brief Analysis of Berkowitz's Top Holdings