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Bruce Berkowitz launched Fairholme in 1999. His amazing returns earned him the title of "Stock Manager of the Decade" from Morningstar, and its AUM reached $19 billion at the end of 2010. Berkowitz's Fairholme Fund managed to return 1.02% per month since September 2000. This compounds to an average annual return of 12.9% for the past 10 years. In 2010, Fairholme Fund returned 25.5%, beating the SPY by more than 10 percentage points. In fact, Berkowitz managed to beat the market every year except in 2003.

Below we compiled a list of stocks that Berkowitz has been holding since the beginning of this year. These are Berkowitz’s holdings with at least $500 million at the end of June. Financial stocks have been performing horribly, and this may not be the best time to own them, but we think at least some of these stocks should be ridiculously underpriced at the moment.

Company

Ticker

Value (x1,000)

YTD Return

AIG

AIG

3024784

-57.9%

SEARS HOLDINGS

SHLD

1170236

-23.7%

CITIGROUP INC

C

1098792

-52.8%

BANK OF AMERICA

BAC

1092139

-60.9%

C I T GROUP

CIT

859207

-37.2%

GOLDMAN SACHS

GS

798853

-47.5%

REGIONS FINANCIAL

RF

768110

-57.0%

BERKSHIRE HATHAWAY

BRK.B

729634

-12.9%

LEUCADIA NATIONAL

LUK

638199

-29.6%

ST JOE CO

JOE

538399

-33.4%

American International Group, Inc. is a multinational insurance corporation. It lost 57.94% since the beginning of this year. It has a market cap of $39 billion and a P/E ratio of 3.92. Berkowitz invested $3.02 billion in AIG shares.

Sears Holdings Corporation is a major retail conglomerate formed in 2005 by the merger of Sears, Roebuck and Co., of Hoffman Estates, Illinois, with Kmart Holdings Corporation, of Troy, Michigan. It lost 23.74% since the beginning of this year. It has a market cap of $6.84 billion. Berkowitz invested $1.17 billion in SHLD shares.

Citigroup Inc. is an American multinational financial services corporation headquartered in New York City. It lost 52.82% since the beginning of this year. It has a market cap of $71.17 billion and a P/E ratio of 7.54. Berkowitz invested $1.1 billion in C shares.

Bank of America offers a full range of banking, investing, asset management and other financial products and services. It lost 60.92% since the beginning of this year. It has a market cap of $58.37 billion. Berkowitz invested $1.09 billion in BAC shares.

CIT is a bank holding company with more than $35 billion in finance and leasing assets. It lost 37.17% since the beginning of this year. It has a market cap of $5.95 billion and a P/E ratio of 28.49. Berkowitz invested $859 million in CIT shares.

The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services, primarily with institutional clients. It lost 47.54% since the beginning of this year. It has a market cap of $47.84 billion and a P/E ratio of 9.27. Berkowitz invested $800 million in GS shares.

Regions Financial Corporation is a publicly held company based in Birmingham, Alabama, USA, with the corporate headquarters at the Regions Center. A member of the S&P 100 Index, the company provides retail and commercial banking, trust, securities brokerage, mortgage and insurance products and services. It lost 57.04% since the beginning of this year. It has a market cap of $4.02 billion. Berkowitz invested $768 million in RF shares.

Berkshire Hathaway Inc. is an American conglomerate holding company headquartered in Omaha, Nebraska that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt. It lost 12.87% since the beginning of this year. It has a market cap of $121.02 million and a P/E ratio of 0.01. Berkowitz invested $638 million in BRK-B shares.

Leucadia National Corporation is a holding company that, through its subsidiaries, engages in mining & drilling services, telecommunications, healthcare services, manufacturing, banking and lending, real estate, and winery businesses. It lost 29.58% since the beginning of this year. It has a market cap of $5.46 billion and a P/E ratio of 2.56. Berkowitz invested $638 million in LUK shares.

The St. Joe Company is a land development company formerly headquartered in Jacksonville, Florida, United States. It lost 33.38% since the beginning of this year. It has a market cap of $1.39 billion. Berkowitz invested $538 million in JOE shares.

Source: Bruce Berkowitz's Long-Term Stock Picks