Just watched the Wealthtrack interview. I was impressed with Berkowitz's answers on why he believes he is and was right to invest in AIG, Bank of America, Fannie Mae and Freddie Mac. I also thought that Consuelo Mack asked poignant questions. I didn't come away with the feeling that this was a softball interview. Regarding Sears Holdings, I would have liked this asked of Bruce Berkowitz. Not sure why it wasn't.

Concur with all of that. Wondering about the disconnect between the way BB values AIG and the way the market values it. BB says it is worth $75 to $100. Yes, Consuelo Mack does a fine job. And she does ask some excellent questions, and not give a softball interview, even though Fairholme is a sponsor of the show. She did the same with David Winters of Wintergreen, asked some tough questions even though they also sponsor the show.

@Ted, see http://www.mutualfundobserver.com/discuss/discussion/15851/fairholme-fund-s-bruce-berkowitz-on-this-weekend-s-wealthtrack#latest

Did you watch his interview on Wealthtrack yesterday or today?
http://www.mutualfundobserver.com/discuss/discussion/15851/fairholme-fund-s-bruce-berkowitz-on-this-weekend-s-wealthtrack#latest
It was very interesting. Makes his case for AIG, BAC, Fannie and Freddie, which together make up 80% of the portfolio.

"Why is the market only valuing AIG at 0.7x book value?"
Maybe they're still thinking in the manner that Berkowitz did in 2009.
"Maybe it's because I don't invest in things I can't understand. Eighteen years ago, after the financial stocks got killed, I was a big buyer of Wells Fargo, Freddie Mac and MBIA. They were simpler businesses then -- and they were cheap and understandable. You could read an annual report or a 10-K and you knew what you were getting.
Or take American International Group. If you looked at an AIG annual report six or seven years ago, you saw one paragraph on derivatives. You look at an AIG annual report today and you see 15 pages on derivatives. I don't think company insiders fully understand what's going on, let alone outsiders. So if I don't understand something, I've learned to walk away." (http://www.kiplinger.com/article/investing/T041-C000-S002-a-bargain-hunter-stands-tall.html)
From the same interview:
"What's the worst that could happen to Sears, one of your biggest holdings?
It gets slowly liquidated, or Eddie Lampert, its chairman, takes the company private. But I don't think he'd do that to shareholders.
"We didn't buy Sears based on the business. There's too much retail in the U.S. (note: my emphasis, and my curiosity as to where the demand for retail space will come from for large Sears spaces if there's already too much retail in the US, which is something I agree with....)If the retail works, then it's a grand slam home run. We invested because of the company's real estate holdings. It has some fabulous locations -- a Kmart in Bridgehampton, N.Y., and a Sears on PGA Boulevard in West Palm Beach, Fla., for instance. The real estate alone is conservatively -- and I mean conservatively -- worth $90 per share [the stock traded at $53 in mid November]."

I was impressed with BB and his case for AIG.
Why is the forward P/E for AIG higher than the trailing P/E? I don't recall seeing forward P/E's lower than trailing P/E's.
Why is the market only valuing AIG at 0.7x book value?
M* has a fair value estimate of AIG of $60. BB thinks it is worth $75-100
His case for Fannie and Freddie is interesting too. I guess the courts and the gov't will decide that.

Also have a look at this thread, where MFOers discuss owning a portfolio of div growth stocks, which is the cheapest alternative of all if you have enough funds and aren't DCAing.

So a few come to mind.
1) Why are you worried about ERs, especially on a funds that are already fairly low cost? This is meant honestly, not as an active/passive debate question. There is some evidence Vanguard's active funds outperform their indices, and VIG has trailed VDIGX over all meaningful time periods since inception.
2) Why are you looking to replace a fund that is looking for opportunistic values in the mid-cap space with one that seeks dividend growth in the large/giant cap space? A dividend growth strategy will very rarely be a value one since you're buying earnings of well known names. These funds behave very differently.
3) What does this do to your asset allocation? VCVLX has a big chunk of some foreign in there, as well as a lot more all-cap names. VIG is an all-American index focusing on steady-eddie type equities.
4) Are there tax implications?
5) Are there any other reasons for the move besides ER?
FWIW, to my mind you might be looking the wrong way 'round. There really isn't an ETF replacement for PRWCX because it uses a very specific active strategy (using preferreds and convertibles for value/arbitrage purposes, to increase income, and to mitigate volatility in a core fund). However, if you're looking to replace it with another core equity fund, a dividend growth strategy like VIG, SCHD, or VDIGX is probably as close as you're going to get.

In my effort to reduce the ER, to swap vcvlx(Vanguard Capital [email protected]) to vig ( Vanguard Dividend Appreciation ETF @0.10) under Large blend category: what factors should I consider? Thanks in advance. I am still searching for etf alternative to prwcx ( @0.75).

I'm a big fan of the concentrated go-anywhere fund as well and I also prefer low AUM so there's no problem with flexibility. As has been said, though, I think its a bigger bet on the manager than in more diversified funds, and I like that because then I feel like I'm really getting something for my expense ratio. The more of his/her own money the manager has invested the better.
At the same time, @JohnChisum, I think there are any number of cases where funds hold more positions and do just as well or better than focused funds. Berkowitz has done very well over the long run but others haven't which to me is an indication of the relative value the manager is adding.
@Amir, I think there are other focused funds throughout the various categories, maybe not as focused as Berkowitz is at the moment, but here's a few:
PTSGX: Large growth, 30 positions, currently closed
OAKWX: Large blend, world stock, 22 positions
IWIRX: Large Growth, I consider it world stock but M* doesn't, 29 positions
MSCFX: Small blend, 46 positions
ICMAX: Small value, 19 positions
BCSIX: Small growth, 41 positions, currently closed
SCMFX: Mid blend, 35 positions
HFCSX: Mid growth, 27 positions
OAKEX: Mid blend international, 61 positions
AKREX: Mid growth, 44 positions
I'd caution my number of positions is from work I did more than a month ago so some might be slightly out of date. You could also screen on M* for funds with a high percentage of assets in their top 10 holdings. I got 267 distinct domestic or international equity portfolios with more than 50% of assets in the top 10. I also got 772 distinct domestic or international equity portfolios with fewer than 50 holdings.

My only stock holding is AAPL. I bought it right after the split. I have a price point in which I will sell some to get my investment back to original purchase point. This is in a tax deferred account. Any stocks I buy I do perform research.
I have a hunch that Apple will do well in the near future with the new stuff just out plus their plans for NFC and health. I don't have the knowledge of Berkowitz but I limit my stock purchases to 5% of the portfolio each.
As Mark commented earlier, I also have a portion of the portfolio designated as speculative. This is where I invest in funds that are alternative or highly speculative. I won't lose the ranch on this.
Another viewpoint here is that funds with a high profile manager carry added risk in case that manager leaves. Pimco is a perfect example. Berkowitz, Mobius, Gabelli, Gundlach etc all come to mind as examples.
Being retired, I have all the time I need now. When I was working, it might not have worked so well.
Thanks Maurice for the kind words.

I know I'm not going to out-invest Berkowitz in the long run. I'll venture a guess and say know one on this board will do so. So, that is why I hold onto FAAFX. It's only 5% of my portfolio. I sit back and listen to the death-watch of Sears, St. Joes and AIG on this discussion board and in other publications and just have to tell myself Bruce is not a dummy. Maybe it's blind faith on my part, but I'll stick with the small amount I have invested in him.
John, I disagree as to top reason to invest in funds. I'm a believer that focused funds have the better chance to out perform diversified funds and focused funds have the only chance of out-performing a market index over time.
1) Proven management - 2) capital preservation focus - 3) focused portfolio - 4) smaller asset base... these principles drive my fund selection. FAAFX has 3 out of 4 of those attributes. Can't double guess the managers skills.

Diversification is the top reason to invest in a mutual fund. That is one reason I stayed away from Janus Twenty back in the 90's when everything was going up and up. Twenty stocks seemed too focused for my taste. FAIRX has less than half of that. One big loss impacts the fund hard. Berkowitz has done well up to now, but his buy and hold strategy is killing that fund instead of selling and going for something else. It's his gut feeling shareholders are buying.
It might sound like I am trashing the fund and I am not. But ten years or even 15years ago I would not have bought Sears. Just my thought. I felt they were on the way out then. Both Sears and JCPenny are stores that should have gone out of business long ago but they keep them alive somehow.
I don't think Berkowitz listened to Kenny Rogers.

FYI: Two Federated CEFs experience distribution cuts.
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=665895
Data & Commentary: http://news.morningstar.com/PDFs/cefw092314.pdf

So, is BB in or out?
If he is not extending credit, is he still holding the stock?

He didn't mention Sears in his interview today.
He did give a nice interview, and presented the case for AIG, BAC, Fannie and Freddie.
I thought he did a good job.
http://www.mutualfundobserver.com/discuss/discussion/15851/fairholme-fund-s-bruce-berkowitz-on-this-weekend-s-wealthtrack#latest

Just received an alert from TRP about "two new investment opportunities", though the first opened in July and the second in August. PRCNX was mentioned in MFO July 2014 Funds in Registration.
"We are pleased to announce two new choices within our lineup of mutual funds:
The Intermediate Tax-Free High Yield Fund (PRIHX) seeks a high level of income, exempt from federal taxes, with an intermediate duration that can help manage interest rate risk.
The International Concentrated Equity (PRCNX) focuses on the potential growth of foreign equities that are believed to be undervalued, using a strategy previously offered only to institutional investors."
Although PRCNX is non-diversified, it plans to hold 40-60 stocks, and the top 10 holdings currently only account for 18% of assets. EM limited to 15%. Regional Exposure is 56.2% Europe, 18.5% Japan, 6.8% Pacific Ex Japan, and 2.1% Latin America. At $2M AUM, it's a little early to make much out of any of those numbers.

Copied from TheStreet.com via StockPro. According to this article, the loan was needed to purchase stock for the holidays.
http://www.thestreet.mobi/story/12859465/1/jim-cramers-mad-dash-sears-is-unraveling-faster-than-i-thought.html

Hey, Janus is one of better performing fund familes...

Over long term through Spring anyway.

Clarifying the Janus Fund Name
09-26-14 Announcement from Janus CEO Richard Weil
Bill will help us build out a new Global Macro Fixed Income business and he will be named the Portfolio Manager of the recently launched Janus Global Unconstrained Bond Fund
Fund Page (D Class): Janus Global Unconstrained Bond
With a current E.R. of 96 bps and 08-31-14 net assets of $12.9 Million.
Holdings and Details
Footnote:
Effective October 6, 2014, the Fund's name changes from Janus Unconstrained Bond Fund to Janus Global Unconstrained Bond Fund with the transition of the Fund to William Gross

What? No B shares?
This is what happens when you have fund families that try to sell funds through all channels - traditional (load-based) advisors, wrap accounts, direct retail, supermarket, retirement plan, and institutional. Three families come to mind - Janus, PIMCO, and American Century. I'm sure there are others.
Anyway, though Janus uses a couple of unconventional letters for some of their share classes, the classes you listed follow these basic channels:
traditional load - A, C (front load, level load)
D - direct retail sale (no 12b-1 fee, but 0.12% admin fee, for bookkeeping)
I - institutional (no admin/12b-1 fees)
N - retirement (no admin/12b-1 fees)
T - supermarket (0.25% admin fee)
S - wrap accounts (0.25% admin fee, plus 0.25% 12b-1 fee)
Some more common designations are Inv(estor) for directly sold noload shares, Adv(isor) for wrap or supermarket shares.
Many families use R to denote retirement class shares (or just use I shares w/o creating a different share class).
Usually, fund families use the same share class for more than one channel, which is why you don't often see as many as seven (or eight, with B shares) different classes.
(I'm not going into families that charge different fees depending on how big the account is - notably American Funds; but also Vanguard with Investor/Admiral, Institutional/Institutional Plus, Signal, ETF. These are just a couple of the more obvious families.)
For all this confusion, one nice thing about Janus is that if you're buying on your own, you only have to worry about T class (unless you're one of the grandfathered investors buying directly from Janus, in which case you just look at D shares). You don't have to think about multiple share classes.

Can't stand the "Alphabet Soup" of mutual fund share classes, and the marketing/sales of funds with loads.
If they want to have a retail share class and an institutional share class, that's more than enough.