So Mr. Berkowitz wants investors with more "sticky" money. And, from his comments, the implication is he wants those investors to have a substantial amount of sticky.
If Bruce moves onto some other type of investment vehicle, where does that leave smaller investors, particularly IRA investors, who have remained loyal to him over the years? Can those accounts be rolled over into this new vehicle or will they be shuttled off into a set of separate accounts which may not get as much attention?
Just wondering.
Comments
John Paulson made the biggest trade in history betting against subprime. He made his investors a fortune. He then proceeded to have a couple of really, really bad years. Investors didn't care about his bet on subprime, it's really a "what have you done for me lately?" mentality that's not exclusive to retail shareholders. Obviously with a hedge fund there can be a lock-up period, but after that. In this day and age, money is more ADD (ADHD, even) than ever, which only adds to it.
There are a ton of other examples. CGM Focus was the biggest mutual fund in all the land. People couldn't say enough good things about Heebner. Now he has a fraction of the AUM. Heebner also started a hedge fund (Wayfarer Capital, I think?) but I don't know what became of it.
Berkowitz is not likely ending Fairholme, simply closing it to new shareholders. How much of his focus will now be on the new private fund who knows.
Maybe this is a bizarre idea, but maybe mutual funds can offer slight fee reductions for long-term shareholders (say 5 years?)
Otherwise, those who like Fairholme and the related funds should stay, but continue to keep an eye on things as one would any fund manager.