LEGENDARY VALUE INVESTOR EXCLUSIVE

For those of you favoring value stocks, this most recent episode of WealthTrack gives us the latest and greatest courtesy of an exclusive interview with Bruce Berkowitz, founder of Fairholme Capital Management and widely considered for many years one of Wall Street's foremost value investors.  It is a great rags to riches to rags story.  He talks candidly about the joys of victory and agonies of defeat.  Enjoy.  

January 4, 2024 Legendary Value Investor Dear WEALTHTRACK Subscriber,  For this weekend’s WEALTHTRACK, the first episode of 2024, we thought it fitting to repeat our exclusive interview with a portfolio manager who was for many years considered one of the best value investors in the business. He is Bruce Berkowitz, Founder and Chief Investment Officer of Fairholme Capital Management where he launched his flagship Fairholme Fund in 2000.  The Fairholme Fund rose to fame by delivering better than 13% annualized returns in its first decade, putting it at the top one percent of its Morningstar Large Cap Value category and crushing its peers and the market. By 2010 Berkowitz had been named Morningstar’s first ever “Domestic Equity Fund Manager of the Decade,” its 2009 “Domestic Stock Fund Manager of the Year,” and had been given the professional distinction of writing an introduction to a chapter in the Sixth Edition of Security Analysis, Benjamin Graham and David Dodd’s classic value investing bible, which had a foreword written by Warren Buffett.  Investors took notice. Fairholme Fund’s assets climbed to a peak of $20 billion-plus dollars by 2011, only to fall 70% to $7 billion by 2012.  The reason: the fund’s 32% drop in 2011 and its huge concentrated positions in a handful of controversial stocks leading to massive redemptions.    Among Fairholme’s controversial and very concentrated holdings over the years have been: insurer AIG, which made up more than half of the portfolio at one point, Bank of America in the midst of the global financial crisis, struggling retailer Sears, and the preferred shares of government-sponsored enterprises Fannie Mae and Freddie Mac,  which were placed into conservatorship by the U.S. government in 2008, and despite being enormously profitable remain there.         The Fairholme Fund’s performance since inception is impressive - total annualized returns of nearly 10%, beating the S&P 500 by a wide margin. But after a stellar first decade, it has mostly lagged the market and its performance has been extremely volatile, going from the top of its class one year to the bottom the next. It has also become even more concentrated.  Today the Fairholme Fund’s assets are down to $1.2 billion and 82% of the fund is concentrated in one stock: Florida real estate developer and manager, The St. Joe Company. The Berkowitz family is the largest shareholder by far of both the fund and St. Joe, holding 30% of each and Berkowitz is St. Joe’s Chairman.   In a candid and reflective interview, Berkowitz reveals the highs and lows of his deep value, contrarian approach, his current strategy,  and the lessons learned from his unsuccessful attempts to turn Sears around and wrest control of the extremely profitable mortgage giants, Fannie Mae and Freddie Mac from the federal government.     If you miss the show on public television, you can watch it on our website, along with our past programs and our guests’ One Investment recommendations.  You can also find the WEALTHTRACK podcast on SoundCloud as well as iTunes and Spotify. Have a lovely weekend and make the week ahead a healthy, profitable and productive one! Best regards, Consuelo Facebook WEALTHTRACK Site YouTube Channel As always, if you miss this week’s program, it will be available on our website. For those of you active on Facebook: You can connect with us on our Consuelo Mack  WEALTHTRACK  page.