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Morningstar's Evaluation of FAIRX is an embarrassment

Morningstar's analysis of the Fairholme Fund states that the fund has delivered "excellent long term risk-adjusted performance".

It also says that "risk-adjusted performance has been weak", and also says that as regards FAIRX specifically that Bruce Berkowitz has "delivered inferior performance".

How can they expect to be taken seriously? It's a waste of time reading this nonsense.

Comments

  • truth.
  • Maybe Morningstar's using an AS (Artificial Stupidity) app?
  • But not the whole truth. The first quote continues: "This can be seen in its five-year alpha calculated relative to the category." The second quote continues: "lagging both the category benchmark and average peer over the past 10-year period."

    Over the past YTD, 1,3, and 5 years, M* reports that FAIRX finished in the top 4% or better. Over the past 10 years, FAIRX finished in the bottom 5%.

    This shows that time frames matter. That, and the fact that recent performance can skew figures for several years. FAIRX returned over 34% YTD vs. about 7% for the category. That supercharged performance is enough to make all the trailing results through five years look great, but not enough to make the 10 year performance look good.
  • edited July 2023
    Morningstar has never reconciled its Manager of the Decade award for Bruce with Fairholme's stewardship.

    Here's its Fairholme Parent Rating "Q" assessment:

    "Fairholme has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating."

    The firm has "just" $1.44B in AUM, well below its high of $20B+.
  • It's interesting that this fund is becoming a topic again after so many years. It was on my list, and I noticed it moving well a couple weeks back; so I took a flyer on it. Needless to say, I've been happy with the results. Pure luck, but good timing. Did ANYONE else actually BUY any; other than me, that is?
  • I haven't bought any recently, but I might as well confess the truth: I have had it for a couple of decades. I'm pretty passive about selling, but I did let go of a piece on Friday.
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