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 8/15/2022. 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 Q1 2022.
Berkowitz's 13F stock portfolio value decreased ~30% from $1.72B to $1.21B this quarter. The 13F portfolio currently has most of the assets invested in St. Joe Companies.
Berkowitz's flagship Fairholme Fund (MUTF:FAIRX) has generated significant alpha since its December 1999 inception: the fund returned at an annualized rate of 9.18% compared to 6.32% for S&P 500 index through H1 2022. FAIRX has however underperformed over the most recent 10-year period. 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).
Sanderson Farms (SAFM): SAFM was a minutely small 0.08% of the portfolio position established last quarter but sold this quarter.
Commercial Metals (CMC), Enterprise Products Partners (EPD), and Citigroup (C): These three positions were increased substantially over the last few quarters. The 6.27% of the portfolio stake in CMC was built over the last five quarters at prices between ~$29 and ~$44 and the stock currently trades at $37.46. EPD is a 7.24% of the portfolio position primarily built over the last four quarters at prices between ~$21 and ~$28. The stock is now at $25.81. The 0.67% Citigroup stake was built over the last three quarters at prices between ~$44 and ~$73. The stock currently trades at $47.25.
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 ~$277 and the stake is now very small at 1.11% of the portfolio. Last several quarters have seen only minor adjustments.
Alibaba Group Holding (BABA): The BABA stake was almost doubled this quarter. It is still a minutely small 0.15% of the portfolio position.
St. Joe Company (JOE): ~80% 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 $34.43. There was marginal trimming in the last three quarters. They control ~42% of the business.
Note: Fairholme's 2022 semi-annual report had the following on St. Joe: Although supply-chain issues have slowed progress there is no letup in demand.
Kinder Morgan (KMI) and Energy Transfer LP (ET): The ~1% 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 $17.90. H2 2021 saw a ~57% stake increase at prices between ~$15.25 and ~$18.70. There was a ~25% selling last quarter at prices between $16.35 and $19.25. This quarter saw marginal trimming. ET is a 0.22% of the portfolio position purchased at prices between ~$5 and ~$8.60 and it is now at $11.93. There was a two-thirds reduction this quarter at prices between ~$9.80 and ~$12.30.
Old Republic International (ORI): The very small 0.58% stake in ORI was increased by ~60% in Q4 2021 at prices between ~$23 and ~$26. The stock currently trades at $21.97. There was a ~15% trimming this quarter.
Intel Corp. (INTC): The 1.82% INTC stake was purchased over the last four quarters at prices between ~$45 and ~$68. The stock currently trades well below that range at $28.96.
The spreadsheet below highlights changes to Fairholme's 13F stock holdings in Q2 2022:
This article was written by
Disclosure: I/we have a beneficial long position in the shares of AAPL, C, FMCC, FNMA, INTC 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.
Additional disclosure: I am long Fannie/Freddie pfds.