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Reply to @AndyJ: No kidding; with all the negative press Berkowitz has been getting lately; there has to be a story here. Perhaps its time to end my experiments with "active managers".
The reason is because Bruce will be re-hiring the Goodhaven managers that he once worked with and Charlie Fernandez will manage St. Joe that will be taken over as a private company by Fairholme --- kinda like what Berkshire does.
If Fernandez left to be a manager of Goodhaven, that would truly top it all off.
I think it's extremely surprising that not only did his long-time co-manager leave, but the guy's his neighbor and married to his cousin - that would signal a serious disagreement. If it was actually Fernandez leaving to manage St Joe, that's something else (although not really the best idea, either, and I suppose I don't see the need for him to leave the Fairholme firm entirely to do that - I wouldn't recommend anyone get their hopes up with something happening with St Joe anytime soon) but that would likely be presented at this time. It wasn't.
Instead, whatever happened does not *look* good at all - if Fernandez has genuinely left the firm entirely, expect more outflows from people who take it as an indicator of real deterioration at the fund.
Does this article reporting that Fernandez left for personal reasons and wishes Berkowitz nothing but the best make you feel better, or not??? It also reports two new hires to help Bruce out.
Reply to @Greg: The two new hires -- is Fraenkel the guy who serves on Barron's roundtable; and is Schmerin the guy who was involved with TARP?
Its possible the Fernandez departure was amicable (Berkowitz says "...hopes to work with him again...". Could be genuine personal issues, or stress from a bad year at FAIRX.
Who knows -- sure has been a rough couple of years for Bruce. I suspect the outflows will continue.
Director of Special Situations at FAIRHOLME CAPITAL MANAGEMENT, LLC
Past
- Chief Operating Officer, Public-Private Investment Program, Office of Financial Stability at U.S. DEPARTMENT OF THE TREASURY - Director for Preparedness Policy, Homeland Security Council, Executive Office of the President at THE WHITE HOUSE - Presidential Management Fellow, Bureau of Economic and Business Affairs at U.S. DEPARTMENT OF STATE - Research Assistant, Office of the Vice President at THE WHITE HOUSE - Research Assistant, Office of the Rt. Hon. Bruce George MP, House of Commons at UNITED KINGDOM PARLIAMENT
Education Georgetown University London School of Economics and Political Science University of Pennsylvania
**********************
Fred Fraenkel (Fairholme Chief Research Officer)
Current Vice Chairman at Beacon Trust Company Global Research Director at Beacon Trust Company
Past Board member at Gerson Lehrman Group Chairman at Clear Asset Management vice chairman at ING Barings Furman Selz
managing director at Lehman Brothers senior management positions at Prudential Securities and E.F. Hutton security analyst at Goldman Sachs
Education University of Pennsylvania - The Wharton School Lehigh University
I do not know whether it is OK to copy, but here it goes:
Departure is a loss, but this fund's bench has been bolstered, too
A departure reflects Fairholme's curtailed plans more than a change in direction.
Comanager Charlie Fernandez resigned from this fund's advisor, Fairholme Capital Management, effective Oct. 17, 2011. The firm has not given a reason for his resignation, but the decision appears to have been made for personal reasons. Fernandez joined the fund in January 2008 and focused on private investments such as those in AmeriCredit and General Growth Properties.
It is likely that the departure is partly related to the fund's scaled-back ambitions. Manager Bruce Berkowitz said that he does not plan to do any private transactions for the foreseeable future. With the market down about 10% from its April 2011 high, Berkowitz believes that there are plentiful opportunities in the public markets. The fund's significantly smaller asset base probably played a role in that decision, too. Because of the fund's 27% year-to-date loss and massive redemptions, its asset base has fallen 55% to $8.9 billion. Berkowitz had believed that the fund's prior scale gave it access to attractive deals.
The fund's recent hires may be better aligned with its current composition. The fund made two additions in the past seven months with former Treasury official Dan Schmerin joining as director of special situations and Wall Street veteran Fred Fraenkel coming on board Oct. 1 as chief research officer. Fraenkel and Schmerin bolster an in-house staff that has been bare bones in recent years. Both also bring relevant expertise given the portfolio's huge position in financials. Schmerin has worked with distressed assets while Fraenkel began his career as a banking analyst.
These changes come amid the fund's worst results since its inception. Berkowitz maintains strong conviction in his holdings, and one should keep in mind that such stretches are par for the course with a deep-value, contrarian approach. In the meantime, the fund's new personnel appear to be a good fit with where it's heading.
Fairholme Hires and Reshuffles After Fernandez Departure It seems the departure of Charlie Fernandez this week from Fairholme Capital Management was part of a larger management reconfiguration at the firm. The management changes were likely sparked by the firm's renewed focus on the public markets, as opposed to private transactions, which were Fernandez's specialty. The firm's flagship Fairholme (FAIRX) fund's struggles with massive shareholder redemptions and blowups in its financials sector bets may have been an additional stress. To help better coordinate research efforts at the firm, Fairholme hired investment veteran Fred Fraenkel. Fraenkel's 30 years of experience is wide-ranging and includes being global research head at Lehman in the early 1990s and, most recently, being vice chairman of Beacon Trust Co. where he helped oversee asset management for high-net-worth individuals. However, Fairholme contracts out a lot of its research to sector experts and has only five in-house analysts. To that end, Dan Schmerin, who was hired last March, will now focus his research on the firm's financials sector bets. Before joining Fairholme, Schmerin had helped run the government's legacy securities Public-Private Investment Program since 2008. While these changes seem promising, the fund has a lot of ground to make up.
Reply to @BobC: Tell me about it. When Fernandez hopped on board, Berkowitz raved about the hire. Said something like "...waited a long time for someone like this to come along...".
Now the market changes, the opportunity set changes, and Fernandez resigns? So the fund was built for something it wasn't, or is now built for something it was? I thought Fernandez was a specialist in special situations -- now, he wasn't really, but Fraenkel will be?
Berkowitz originally excused asset bloat by stating that it opened up opportunities not available to FAIRX when it was a small fund. Now, that whole hypothesis went to pot (after the hot money has come in and subsequently left)?
Whose in charge, Bruce? What are these funds all about?
Looking forward to the new Fairholme launch: HUBRISX.
Comments
http://www.gurufocus.com/news/148701/fairholme-fund-comanager-fernandez-quits
Shame I never took any profits on this one.
Bruce may have ascended to his level of incompetence.
Fairholme fund will be renamed to Fairhaven.
If Fernandez left to be a manager of Goodhaven, that would truly top it all off.
I think it's extremely surprising that not only did his long-time co-manager leave, but the guy's his neighbor and married to his cousin - that would signal a serious disagreement. If it was actually Fernandez leaving to manage St Joe, that's something else (although not really the best idea, either, and I suppose I don't see the need for him to leave the Fairholme firm entirely to do that - I wouldn't recommend anyone get their hopes up with something happening with St Joe anytime soon) but that would likely be presented at this time. It wasn't.
Instead, whatever happened does not *look* good at all - if Fernandez has genuinely left the firm entirely, expect more outflows from people who take it as an indicator of real deterioration at the fund.
I hope you would be able to get an update from Bruce and Fernandez.
Kenster, Is that your wish or news?
http://www.investmentnews.com/article/20111019/FREE/111019896/1022/onlinenews
Its possible the Fernandez departure was amicable (Berkowitz says "...hopes to work with him again...". Could be genuine personal issues, or stress from a bad year at FAIRX.
Who knows -- sure has been a rough couple of years for Bruce. I suspect the outflows will continue.
Current
Director of Special Situations at FAIRHOLME CAPITAL MANAGEMENT, LLC
Past
- Chief Operating Officer, Public-Private Investment Program, Office of Financial Stability at U.S. DEPARTMENT OF THE TREASURY
- Director for Preparedness Policy, Homeland Security Council, Executive Office of the President at THE WHITE HOUSE
- Presidential Management Fellow, Bureau of Economic and Business Affairs at U.S. DEPARTMENT OF STATE
- Research Assistant, Office of the Vice President at THE WHITE HOUSE
- Research Assistant, Office of the Rt. Hon. Bruce George MP, House of Commons at UNITED KINGDOM PARLIAMENT
Education
Georgetown University
London School of Economics and Political Science
University of Pennsylvania
**********************
Fred Fraenkel
(Fairholme Chief Research Officer)
Current
Vice Chairman at Beacon Trust Company
Global Research Director at Beacon Trust Company
Past
Board member at Gerson Lehrman Group
Chairman at Clear Asset Management
vice chairman at ING Barings Furman Selz
managing director at Lehman Brothers
senior management positions at Prudential Securities and E.F. Hutton
security analyst at Goldman Sachs
Education
University of Pennsylvania - The Wharton School
Lehigh University
http://analysis.morningstar.com/analystreport/far.aspx?t=FAIRX®ion=USA&culture=en-US
Departure is a loss, but this fund's bench has been bolstered, too
A departure reflects Fairholme's curtailed plans more than a change in direction.
Comanager Charlie Fernandez resigned from this fund's advisor, Fairholme Capital Management, effective Oct. 17, 2011. The firm has not given a reason for his resignation, but the decision appears to have been made for personal reasons. Fernandez joined the fund in January 2008 and focused on private investments such as those in AmeriCredit and General Growth Properties.
It is likely that the departure is partly related to the fund's scaled-back ambitions. Manager Bruce Berkowitz said that he does not plan to do any private transactions for the foreseeable future. With the market down about 10% from its April 2011 high, Berkowitz believes that there are plentiful opportunities in the public markets. The fund's significantly smaller asset base probably played a role in that decision, too. Because of the fund's 27% year-to-date loss and massive redemptions, its asset base has fallen 55% to $8.9 billion. Berkowitz had believed that the fund's prior scale gave it access to attractive deals.
The fund's recent hires may be better aligned with its current composition. The fund made two additions in the past seven months with former Treasury official Dan Schmerin joining as director of special situations and Wall Street veteran Fred Fraenkel coming on board Oct. 1 as chief research officer. Fraenkel and Schmerin bolster an in-house staff that has been bare bones in recent years. Both also bring relevant expertise given the portfolio's huge position in financials. Schmerin has worked with distressed assets while Fraenkel began his career as a banking analyst.
These changes come amid the fund's worst results since its inception. Berkowitz maintains strong conviction in his holdings, and one should keep in mind that such stretches are par for the course with a deep-value, contrarian approach. In the meantime, the fund's new personnel appear to be a good fit with where it's heading.
Fairholme Hires and Reshuffles After Fernandez Departure
It seems the departure of Charlie Fernandez this week from Fairholme Capital Management was part of a larger management reconfiguration at the firm. The management changes were likely sparked by the firm's renewed focus on the public markets, as opposed to private transactions, which were Fernandez's specialty. The firm's flagship Fairholme (FAIRX) fund's struggles with massive shareholder redemptions and blowups in its financials sector bets may have been an additional stress.
To help better coordinate research efforts at the firm, Fairholme hired investment veteran Fred Fraenkel. Fraenkel's 30 years of experience is wide-ranging and includes being global research head at Lehman in the early 1990s and, most recently, being vice chairman of Beacon Trust Co. where he helped oversee asset management for high-net-worth individuals. However, Fairholme contracts out a lot of its research to sector experts and has only five in-house analysts. To that end, Dan Schmerin, who was hired last March, will now focus his research on the firm's financials sector bets. Before joining Fairholme, Schmerin had helped run the government's legacy securities Public-Private Investment Program since 2008. While these changes seem promising, the fund has a lot of ground to make up.
Now the market changes, the opportunity set changes, and Fernandez resigns? So the fund was built for something it wasn't, or is now built for something it was? I thought Fernandez was a specialist in special situations -- now, he wasn't really, but Fraenkel will be?
Berkowitz originally excused asset bloat by stating that it opened up opportunities not available to FAIRX when it was a small fund. Now, that whole hypothesis went to pot (after the hot money has come in and subsequently left)?
Whose in charge, Bruce? What are these funds all about?
Looking forward to the new Fairholme launch: HUBRISX.
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