Tracking Bruce Berkowitz's Fairholme Portfolio - Q3 2021 Update

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John Vincent
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Summary

  • Bruce Berkowitz’s 13F stock portfolio value decreased this quarter from $1.27B to $1.24B.
  • They increased Enterprise Products Partners, Commercial Metals and Intel while dropping Vistra Corp.
  • The 13F portfolio is mostly invested in St. Joe Companies.
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This article is part of a series that provides an ongoing analysis of the changes made to Fairholme’s 13F stock portfolio on a quarterly basis. It is based on Fairholme’s regulatory 13F Form filed on 11/15/2021. Please visit our Tracking Bruce Berkowitz's Fairholme Fund Holdings article for an idea on how his holdings have progressed over the years and our previous update for the fund’s moves during Q2 2021.

Berkowitz’s 13F stock portfolio value decreased ~2% from $1.27B to $1.24B this quarter. The 13F portfolio currently has most of the assets invested in St. Joe Company.

Berkowitz’s flagship Fairholme Fund (MUTF:FAIRX) has generated significant alpha since its December 1999 inception: the fund returned at an annualized rate of 10.10% compared to 7.18% for S&P 500 index through Q2 2021. FAIRX has however underperformed over the most recent 10-year period. Of the ~$1.5B AUM, Cash and Equivalents are at ~23%, St. Joe stock at ~70%, Fannie/Freddie pfds at ~8%, and Imperial Metals at ~2%. The other funds under Fairholme umbrella are Fairholme Focused Income Fund (MUTF:FOCIX) and Fairholme Allocation Fund (MUTF:FAAFX). Equity holdings that are not in the 13F report include Fannie Mae (OTCQB:FNMA) pfds, Freddie Mac (OTCQB:FMCC) pfds, and Imperial Metals (OTCPK:IPMLF).

New Stakes:

Nutrien Ltd. (NTR): NTR is a very small 0.10% of the portfolio position established this quarter.

Stake Disposals:

Vistra Corp. (VST): VST was a small 0.81% of the portfolio position purchased over the last two quarters at prices between ~$16 and ~$24. The disposal this quarter was at prices between $16.75 and $19.50. The stock currently trades at $21.09.

Stake Increases:

Commercial Metals (CMC), Enterprise Products Partners (EPD), and Intel Corp. (INTC): These three positions were increased substantially this quarter. The 2.77% of the portfolio stake in CMC was built over the last two quarters at prices between ~$28 and ~$36 and the stock currently trades at $33.23. EPD is a 2.78% of the portfolio position primarily built this quarter at prices between ~$21.30 and ~$24.60. The stock is now just below that range at $20.73. The 1.80% INTC stake was purchased over the last two quarters at prices between ~$52 and ~$68. The stock currently trades below that range at $49.60.

Kinder Morgan (KMI) and Energy Transfer LP (ET): These small (less than ~1% of the portfolio each) stakes were established in Q3 2020. The 1.26% KMI position saw a ~220% stake increase in Q4 2020 at prices between ~$11.50 and ~$15 and it currently trades above that range at $15.24. This quarter also saw a ~40% stake increase at prices between ~$15.70 and ~$18.70. ET is a 1.15% of the portfolio position purchased at prices between ~$5 and ~$8.60 and it is now at $8.25. There was a ~45% stake increase this quarter at prices between ~$8.75 and ~$10.70.

Enbridge Inc. (ENB), Old Republic International (ORI) and Williams Companies (WMB): These small (less than ~1.25% of the portfolio each) stakes were increased this quarter.

Stake Decreases:

St. Joe Company (JOE): ~86% of Fairholme’s 13F assets are in St. Joe stock. The bulk of the position was purchased in the 2008-2009 timeframe and there have only been minor adjustments since. Last three quarters of 2017 had seen a combined ~14% increase at prices between $16.35 and $19.55. Since then the activity has been minor. The stock is now at $47.29. There was marginal trimming this quarter. They control ~43% of the business.

Note: Fairholme’s mid-year 2021 report referenced St. Joe CEO Jorge Gonzalez’s comment regarding the growth runway: “…only scratching the surface…for multi-generational growth”. The 2020 annual report mentioned the following as the reasons for Fairholme’s continued bullishness: robust pricing, strong sales, and the fact that their entitled lands in Walton, Bay, and Gulf Counties may be worth exponentially more than implied by the company’s market value.

Western Midstream Partners (WES): WES is a small stake first purchased in Q1 2020 at prices between ~$3 and ~$22. Q3 2020 saw a ~85% stake increase at prices between $7.35 and $10.50. The stock is now at $19.79 and the stake is at 0.63% of the portfolio. Last two quarters have seen a one-third reduction at prices between ~$18.30 and ~$23.35.

Kept Steady:

Berkshire Hathaway (BRK.A) (BRK.B): Q1 2019 saw a 5.6% of the portfolio stake purchased at prices between $188 and $209. The position was reduced by ~85% to a very small 0.84% portfolio stake next quarter at prices between $197 and $219. Q1 2020 saw a ~9% portfolio stake built at prices between ~$162 and ~$230. There was a one-third increase next quarter at prices between $170 and $202. Q4 2020 saw a ~80% selling at prices between ~$201 and ~$234. That was followed with a ~15% reduction next quarter at prices between ~$227 and ~$265. The stock currently trades at ~$290 and the stake is now very small at 1.13% of the portfolio.

Alibaba Group Holding (BABA) and Apple Inc. (AAPL): These two minutely small (less than ~0.16% of the portfolio each) stakes were kept steady this quarter.

The spreadsheet below highlights changes to Fairholme’s 13F stock holdings in Q3 2021:

Bruce Berkowitz - Fairholme Fund

Source: John Vincent. Data constructed from Fairholme's 13F filings for Q2 2021 and Q3 2021.

This article was written by

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Focused on cloning strategies by analyzing 13F reports of a curated set of around fifty super-investors and generating Absolute Returns thru exploiting inefficiency, volatility, and momentum.
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Disclosure: I/we have a beneficial long position in the shares of AAPL, FNMA, FMCC, FNMFN, FMCKP, KMI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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