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Tracking Bruce Berkowitz's Fairholme Portfolio - Q3 2018 Update
I finally sold out earlier this week. Simple tax planning. At this point if one thinks FAIRX is going to triple, that has the same probability for a penny pot stock. I might actually buy a stock after a long time with the proceeds.
Truth is, I should have bailed when Bruce started taking in new investors at a prodigious rate, and doing every Bloomberg, etc., interview he could claiming that "it was the most effective way to reach his fellow shareholders...".
Then, I should have bailed when Bruce made his slew of questionable personnel moves / saw defections a while ago. Who was that guy he hired and bought a house for (right next to his own), who had no investing experience.
Anyway, I came to the conclusion that Bruce might be a brilliant investor, but was a poor manager of his own company.
Anyway, I came to the conclusion that Bruce might be a brilliant investor, but was a poor manager of his own company.
@Shostakovich, when was he a brilliant investor? Brilliant investors, ala Buffett, have sustained growth over many years. More wins than losses. I don't see that with Berkowitz. I do see he did well early on when he hitched his wagon to Buffet/BRK, but then totally went south when he thought he could invest on his own.
@MikeM. He certainly seems to have lost his touch, but I think he's enjoyed periods of great success not necessarily linked to BRK.
FAIRX got me through the 2000's. Invested heavy and fairly early with BAC on his strong recommendation. But I also invested heavy in FAAFX, which I believe was mismanaged never really delivered ... not yet anyway.
But he clearly misunderstood what his early investors were attracted too ... excess performance with lower volatility. Super concentrated in banks early and the fund has been extremely volatile ever since.
Yes @Shostakovich, overtime the Fairholme shop seemed mismanaged, with lots of personnel changes. (Fernandez I think ... "my Charlie Munger," BB called him.) And there were others.
Closed and re-opened several times. BB became active in take-overs, like St Joe.
Clearly seduced by EL and the entire Sears thesis.
Perhaps skills and experiences of money managers are better suited for some market periods than others and the flashes of insight one may have in one decade may not carry into next?
“For over a thousand years Roman conquerors returning from the wars enjoyed the honor of triumph, a tumultuous parade. In the procession came trumpeteers, musicians and strange animals from conquered territories, together with carts laden with treasure and captured armaments. The conquerors rode in a triumphal chariot, the dazed prisoners walking in chains before him. Sometimes his children robed in white stood with him in the chariot or rode the trace horses. A slave stood behind the conqueror holding a golden crown and whispering in his ear a warning: that all glory is fleeting.”
He certainly seems to have lost his touch, but I think he's enjoyed periods of great success not necessarily linked to BRK.
Was some periods of 'great success' lucky or brilliant? I would say the definition of a brilliant investor is one with more wins than losses over his career, hardly the case for this guy. I don't have past portfolio data, but my recollection is he was invested 20-30% in BRK throughout his good years. Another 20% range in cash. That's likely where stability and steady growth came from. I think he may have sold BRK and replaced it with another holding company, Leucadia(?) rings a bell. In any case, that was the down turn I saw along with his 'brilliant' investments in St. Joe's, Sears and Fannie mae.
@ Charles, we'll have to disagree. In my perception and in retrospect he never has had "a touch".
By the way, I never owned FAIRX, but I did buy into the FAAFX fund, thinking this guy did have a magic touch and was a special investor. I'll admit now I was duped. Bought at inception and held for a just couple years. Sold when his "persistence" just seemed to be the inability to admit mistakes.
He did well with my investment, more than doubled it right up until he was named M* Manager of the decade or some such nonsense. That was a signal for me to sell.
Comments
Truth is, I should have bailed when Bruce started taking in new investors at a prodigious rate, and doing every Bloomberg, etc., interview he could claiming that "it was the most effective way to reach his fellow shareholders...".
Then, I should have bailed when Bruce made his slew of questionable personnel moves / saw defections a while ago. Who was that guy he hired and bought a house for (right next to his own), who had no investing experience.
Anyway, I came to the conclusion that Bruce might be a brilliant investor, but was a poor manager of his own company.
FAIRX got me through the 2000's. Invested heavy and fairly early with BAC on his strong recommendation. But I also invested heavy in FAAFX, which I believe was mismanaged never really delivered ... not yet anyway.
I was a fan. And I had some good company.
Here's a great article from Fortune 2010 ...
Bruce Berkowitz: The megamind of Miami
But he clearly misunderstood what his early investors were attracted too ... excess performance with lower volatility. Super concentrated in banks early and the fund has been extremely volatile ever since.
Yes @Shostakovich, overtime the Fairholme shop seemed mismanaged, with lots of personnel changes. (Fernandez I think ... "my Charlie Munger," BB called him.) And there were others.
Closed and re-opened several times. BB became active in take-overs, like St Joe.
Clearly seduced by EL and the entire Sears thesis.
Perhaps skills and experiences of money managers are better suited for some market periods than others and the flashes of insight one may have in one decade may not carry into next?
“For over a thousand years Roman conquerors returning from the wars enjoyed the honor of triumph, a tumultuous parade. In the procession came trumpeteers, musicians and strange animals from conquered territories, together with carts laden with treasure and captured armaments. The conquerors rode in a triumphal chariot, the dazed prisoners walking in chains before him. Sometimes his children robed in white stood with him in the chariot or rode the trace horses. A slave stood behind the conqueror holding a golden crown and whispering in his ear a warning: that all glory is fleeting.”
― George Patton
@ Charles, we'll have to disagree. In my perception and in retrospect he never has had "a touch".
By the way, I never owned FAIRX, but I did buy into the FAAFX fund, thinking this guy did have a magic touch and was a special investor. I'll admit now I was duped. Bought at inception and held for a just couple years. Sold when his "persistence" just seemed to be the inability to admit mistakes.
Derf+1