Fairholme Fund's Stock Picks: XTO, SHLD, BRK.A, WCG

According to its latest letter to shareholders [.pdf], during the six months 6/1/07 to 30/11/07, the Fairholme Fund acquired holdings in XTO Energy (XTO), a company engaged in the exploration and production of natural gas, and WellCare Health Plans (WCG), a Florida-based Health Maintenance Organization operating in several states. In the same period, the fund also added "materially" to its holdings in Sears Holdings Corp. (SHLD) and Berkshire Hathaway, Inc. (BRK.A). In its review, the fund noted that:

Sears Holdings is a relatively new, core position that continues to cost the Fund. Store traffic has been weak given stressed consumers and the company’s greater exposure to depressed housing markets than most. Many despair that Sears seems unable to regain past retail glory, despite a conservative balance sheet and many valuable assets. In searching for instant gratification, most are missing key points. As with Warren Buffett in the late 1990s, many believe Eddie Lampert’s investment skills have faded — but it is just as unlikely that this leopard has lost his spots.

The Fund managers also commented on their stake in Leucadia National (LUK), which constituted the fifth largest holding as of 30/11/07:

Leucadia National knocked the ball out of the park last year with its investment in Australian, iron-ore miner Fortescue. Although Leucadia does not seem inexpensive, its roster of lottery tickets, liquidity, and history of success in difficult times allow us the luxury of patience.

During the same six-month period, the Fund disposed of its holdings in the following:
• Eastman Chemical Company (EMN)
• Mueller Water Products, Inc., (MWA) Class A
• Spectra Energy Corp. (SE)
• Marsh & McLennan Cos., Inc. (MMC)
• USA Mobility, Inc. (USMO)
• Calumet Specialty Products Partners (CLMT)
• Federated US Treasury Obligation Fund.

Comments

[User 163373:]

Fairholme in it's latest SEC filings has disposed of most of their stakes in XTO. They made a new investment in Progressive based on their Feb 13, 2008 filings.

2008 Mar 13 10:08 AM

[weiwentg:]

probably no one is going to read this article by now, but Bruce disposed of his holdings in Progressive. he's been buying more Saint Joe (JOE).

2008 Jun 27 07:49 AM