2011 Performance Of Fairholme's Largest Current Equity Holdings

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Includes: AIG, BAC, BRK.B, C, GS, SHLD
by: Zvi Bar

Fairholme Capital Management is well-regarded as one of the most popular and high-profile asset managers. Its founder, Bruce Berkowitz, is considered by many to be one of the better large investors on the Street, and also a contrarian. His fund is regarded as one of the more successful mutual funds in the business, though it has had a very difficult year in 2011.

Fairholme is well known for holding fewer, larger positions than most funds of its size, similar to Warren Buffett's strategy. The fund and Bruce Berkowitz have come under pressure within 2011 due to the poor performance of many financials, including the fund's core holdings in American International Group (NYSE:AIG), Bank of America (NYSE:BAC) and Citigroup (NYSE:C), as well as its significant position in Sears Holdings (NASDAQ:SHLD), the fund's second largest position. These four companies Were Fairholme's largest holdings as of its latest report.

Below is a chart listing the ten largest equity holdings within Fairholme's most recent 13F. I have also provided the 1-month, 6-month and 2011-to-date share price performance rates for these equities.

The fund's largest investment, AIG, is down over 58 percent, while its third largest holding, BAC, is down about 63 percent since the start of 2011. None of Fairholme's listed top holdings are positive within 2011, all underperforming the broader market. These investments have, on average, fallen about 32 percent, which is nearly identical to the year to date performance of the Fairholme Fund. Fairholme actually outperformed its holdings due to its cash holdings, and will likely report additional consolidations in its Q4 13F.

The best performing listed investments, since the start of 2011, are both the A and B classes of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), which are down about 3.5 percent. Fairholme sold out of Morgan Stanley (NYSE:MS) during Q3, having previously held nearly 12 million shares, and nearly liquidated its entire Goldman Sachs (NYSE:GS) stake for what was valued at over $896 million at the end of the third quarter. Fairholme also sold about 5 million shares in Brookfield Asset Management, but still holds over 22.24 million shares.

Fairholme also made some minor purchases within the financials along with those sales. Fairholme added over 5.3 million shares of Bank of America (BAC), and now owns over 105 million shares in the bank. Fairholme also increased its position in Berkshire Hathaway and MBIA (NYSE:MBI).

Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.

Disclosure: I am long C, BAC.