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Fairholme Capital Management was founded by Bruce Berkowitz in 1997 who was formerly a senior portfolio manager at Lehman Brothers and a managing director of Smith Barney. Berkowitz was named 2009 Domestic-Stock Fund Manager of the Year and Domestic-Stock Fund Manager of the Decade by Morningstar, Inc. Berkowitz has been a popular topic lately among investors wondering if his massive positions in financials (notably Bank of America (NYSE:BAC)) could spell disaster for his fund.

A look at his 13F filings over time is shown below (Contact us for the full reports):

click to enlarge

Q2 changes:

  • Bruce’s big bet going into Q2 is AIG Group (NYSE:AIG). Shares increased from 44M to 103M with a reported market value of $3BN as of June 30th.

  • Shares in Berkshire Hathaway (NYSE:BRK.A) increased from 7.8M to 9.4M with reported market value of $730M.

  • Shares in Morgan Stanley (NYSE:MS) were cut 69% to 11.9M cutting the reported market value from $1.06BN to $275M going into Q2.

  • 2 new positions were initiated in Jefferies Group (JEF) and Assured Guaranty (NYSE:AGO) (representing only about 1% of reported longs each).

A number of positions from last quarter were cut. The two biggest:

  • Cisco Systems (NASDAQ:CSCO) (a 4% position last quarter) was removed after just 1 quarter in the portfolio.

  • Spirit Aerosystems (NYSE:SPR) was finally completely removed from the portfolio after slowly being trimmed from 27M shares in Q4 2009.

Berkowitz more than doubled his stake in AIG over the course of Q2. Given the recent selloff in financials in recent weeks, this could indeed spell trouble for his Fairholme Fund:

Source: Bruce Berkowitz's Holdings: Q2 Changes