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I sold out of FAIRX, half about a month ago the remainder last week. Pay the capitol gains and move on. My remaining large caps are YACKX and EXHAX. I'm kind of neutral on Manning and Napier and am looking for another large cap to replace FAIRX.
It may not be a large cap fund but the closest fund to FAIRX is (imho) FPACX (FPA Crescent fund). It is an ultra-opportunistic, go anywhere/do anything fund which seeks to buy at a substantial discount.
Yacktman is not an apples-to-apples comparison, but I think that's fairly close and I think a more conservative concentrated fund. Additionally, while it has not had a good year this year either, there is also investing with Berkowitz enemy and partial Mets owner David Einhorn via Greenlight Reinsurance (GLRE), although that is a roundabout way of investing with Einhorn. Fairfax Financial Holdings (FRFHF.PK) is another roundabout insurance company investment, this time with Canadian value investor Prem Watsa. While Fairfax has not done quite as well recently, it did manage to avoid the credit crisis entirely, rising 11% in 2008. The only issue with Fairfax: it is nearly $400 a share. Still, Watsa and Einhorn are highly regarded investors and Fairfax and Greenlight RE are an indirect way to invest with both.
There really isn't a perfect replacement. Here are a few alternatives that are flexible value funds:
ARIVX - Aston River Road Independent Value Holds lots of cash when market is deemed over valued (recently around 50%). It is called a small value fund by M* and has stocks in mid, small, and micro caps. It is focused with less than 30 positions and nothing outside the USA.
APPLX - Appleseed Fund It is considered a mid cap value fund, but they own stocks all sizes and have ~30 percent international. It is a focused fund (I think its less than 30 holdings) that tends to shun conventional thinking. They own some gold and they are a "socially responsible fund."
On YACKX not being apple-to-apples with FAIRX -- I'm assuming your logic here is that YACKX is a good old-fashioned value-oriented stock picking fund, while Bruce goes beyond seeking out "undervalued" and looks into distressed assets and covers his bases occasionally by buying debt of the companies in the portfolio?
I guess there's also the difference in that Bruce might try to make JOE into something of a BRK?
I think there's a lot of potentially very exciting ideas for it and you can look at various possibilities on how it could turn out, from Berkshire to maybe something like Howard Hughes. However, who knows what's in store - Eddie Lampert was going to make Sears Holdings into the next Berkshire Hathaway (among a million other things), and while '08 happened, I don't see any evidence that that's possibly ever in the cards. Instead, Lampert just keeps buying back shares (http://finance.fortune.cnn.com/2011/05/12/eddie-lampert-dementor/ and http://blogs.forbes.com/adamhartung/2011/05/11/sears-stop-the-subsidies-sell-the-stock-invest-in-groupon/?utm_source=allactivity&utm_medium=rss&utm_campaign=20110511) It's not that Berkowitz isn't brilliant, but I don't see any transformations in St Joe quickly, nor do I see it - even with Berkowitz's intelligence - without potential for not happening due to outside forces/factors, maybe.
Who knows, but I certainly see potential for volatility over the next couple of years. There are certainly those who are going to also say that Berkowitz taking on St Joe in this sort of expanded fashion is going to cause too much distraction from the day-to-day, although I don't think that's as much of a concern. Given Berkowitz's Asian tour recently, maybe Genting would be a good partner, as the Asian company appears to be interested in US sites, such as their recent redo of the Aqueduct racetrack right near New York City. The company's Asian resorts (which are jaw-dropping) may make a good fit in Florida - the company is looking at a site in Miami (http://www.miamiherald.com/2011/05/31/2244210/investing-in-miamis-dynamic-future.html)
I'm particularly curious about any water rights w/St Joe.
Both are concentrated portfolios, but Yacktman is more of - as you mentioned - an old-fashioned value fund and has shown some ability to switch towards being more conservative, which lead to an excellent (relative to peers) '08, followed by a solid '09. Berkowitz is less limited and can take portfolio-sized risks in terms of heavily betting on a single sector or other such maneuvers. Yacktman is not going to swing for the fences and isn't without the potential for an underperforming year, but appears to have a higher priority for vanilla (and I mean that in the best possible way) consistency.
As noted below, it's hard to think of a very specific replacement for Fairholme, as it's rather difficult to think of a replacement for Romick and FPA Crescent.
If you don't mind sharing, what other funds do you have in your portfolio? In other words, why do you need a Fairholme duplicate? Afterall, you mentioned also having YACKX, which is similar to FAIRX to begin with.
Yes, Matt, I'd be curious to see your overall allocation; on the basis that an apples to apples replacement to Berkowitz migh not even be necessary. Thanks.
Not really, GoodHaven is at best a watered-down FAIRX. You buy Berkowitz for his "bets" on the market; his conviction to invest heavily in areas where he sees the most value. Although the PMs at GoodHaven learned from Berkowitz, this is no easy thing to duplicate.
So those early returns for FAIRX were all due to BB's prowess and Trauner and Pitkowsky had nothing to do with them. Well now BB has no one to blame but himself.
GOODX has not yet reported portfolio holdings, but Kiplinger and other writeups describe the fund's portfolio as 10-15 holdings. The prospectus says concentrated holdings of virtually any type of security and that the fund is undiversified. GoodHaven separate accounts have seven holdings and 67% cash. Please share your sources for GOODX's portfolio. Thank you in advance.
Admittedly, I did a quick look at Morningstar, and those stats are wrong (so I've deleted them - thanks for pointing that out). But, that said, the core of my point remains the same. As far as Berkowitz’s “blaming” anyone for poor performance, it’s way too early to tell.
Comments
ARIVX - Aston River Road Independent Value
Holds lots of cash when market is deemed over valued (recently around 50%). It is called a small value fund by M* and has stocks in mid, small, and micro caps. It is focused with less than 30 positions and nothing outside the USA.
APPLX - Appleseed Fund
It is considered a mid cap value fund, but they own stocks all sizes and have ~30 percent international. It is a focused fund (I think its less than 30 holdings) that tends to shun conventional thinking. They own some gold and they are a "socially responsible fund."
I guess there's also the difference in that Bruce might try to make JOE into something of a BRK?
Anything else I'm missing?
Thanks.
Who knows, but I certainly see potential for volatility over the next couple of years. There are certainly those who are going to also say that Berkowitz taking on St Joe in this sort of expanded fashion is going to cause too much distraction from the day-to-day, although I don't think that's as much of a concern. Given Berkowitz's Asian tour recently, maybe Genting would be a good partner, as the Asian company appears to be interested in US sites, such as their recent redo of the Aqueduct racetrack right near New York City. The company's Asian resorts (which are jaw-dropping) may make a good fit in Florida - the company is looking at a site in Miami (http://www.miamiherald.com/2011/05/31/2244210/investing-in-miamis-dynamic-future.html)
Pic of Genting's rather remarkable resort in Malaysia: http://en.wikipedia.org/wiki/File:Genting_Theme_Park.jpg
I'm particularly curious about any water rights w/St Joe.
Both are concentrated portfolios, but Yacktman is more of - as you mentioned - an old-fashioned value fund and has shown some ability to switch towards being more conservative, which lead to an excellent (relative to peers) '08, followed by a solid '09. Berkowitz is less limited and can take portfolio-sized risks in terms of heavily betting on a single sector or other such maneuvers. Yacktman is not going to swing for the fences and isn't without the potential for an underperforming year, but appears to have a higher priority for vanilla (and I mean that in the best possible way) consistency.
As noted below, it's hard to think of a very specific replacement for Fairholme, as it's rather difficult to think of a replacement for Romick and FPA Crescent.
Great suggestions. Applx has lower correlation to SP500 compared to most funds.
So those early returns for FAIRX were all due to BB's prowess and Trauner and Pitkowsky had nothing to do with them. Well now BB has no one to blame but himself.
GOODX has not yet reported portfolio holdings, but Kiplinger and other writeups describe the fund's portfolio as 10-15 holdings. The prospectus says concentrated holdings of virtually any type of security and that the fund is undiversified. GoodHaven separate accounts have seven holdings and 67% cash. Please share your sources for GOODX's portfolio. Thank you in advance.
You can see what AIG is up to lately: http://www.zerohedge.com/article/us-taxpayers-about-be-saddled-another-european-bailout-courtesy-aig