Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
As you knew it would be sooner or later. Fortunately for those of us who still hold shares in the fund it was the former and not the latter. I actually bought more while the fund was down. We'll see how much St. Joe's dirt I end up eating.
Reply to @Mark: That press release that was put out by JOE on Friday afternoon a week or two ago was definitely negative, but when you have this % of shares short:
Short % of Float (as of Jan 13, 2012)3: 60.00%
...and a few large institutional shareholders (see also: Blackrock and Janus, among others), any decent news could cause a pretty large short squeeze (see Sears.)
I'm also using PFF (iShares US Preferreds ETF) as a more cautious way to get financials exposure as this ETF is packed with financial firms including banks....and I'll gladly take the 6+% yields it produces.
Reply to @Kenster1_GlobalValue: Good for those who took part in the move, which - when you have 60% of the float short, is not entirely unexpected. They would also be advised to consider taking profits.
However, as one who questioned why anyone in their right mind would want to own Sears on fundalarm when it was over $100 a share (and got a ton of upset responses - "OMG, it's a value stock!"), I'll continue to say that Sears is not sustainable in its current form - and buying back shares/creating short squeezes does nothing to fix Sears and K-Mart stores - two brands whose interest from consumers continues to erode. This morning from Fitch on retail:
10:45 AM ET Fitch: Sears Continues To Be Weakest Performer In Group Dow Jones
I will gladly reconsider my opinion on Sears once Eddie Lampert actually comes up with a plan to try to restore a classic American brand rather than another round of buybacks (almost all of which was bought higher/much higher) As for taking the company private, I'm genuinely curious as to the "then what?" of that plan.
Meanwhile, other companies continue to take market share from Sears.
As for Fairholme, I continue to like the less-discussed aspects of the portfolio, such as the Asian insurers and Brookfield Asset Management, as well as to a lesser degree Leucadia. There's also the tiny investment in JZ Capital Partners.
Reply to @scott: The weird thing is that the Sears stores here look like on they're on the lower-end of the scale, whereas the Sears stores I've seen in Canada are much nicer and more upscale.
They share the same name but I guess Sears Canada management is still separate from Eddie Lampert's Sears in the US.
However, I did find some Hankook tires at a Sears Centre I needed about a year ago. Their Land's End line serves a niche market --- for example, my daughter's private preschool uniforms with logos are done thru Land's End/Sears and they're not cheap either.
So Scott - you don't buy your spiffy Suits and shiny work shoes from Sears? LOL.
Reply to @Kenster1_GlobalValue: I hate shopping for clothes, but do so at a mix of places like Target, Marshalls, JC Penny even Costco (which does have fairly good deals on clothes.) It's not a matter of my opinion on Sears merchandise/stores, although given the company's continued losses, apparently neither are attracting an enough of an audience.)
From the perspective of value, I think there's value in the real estate but not as much value as some believe there to be. I do believe that retail will be increasingly competitive in the next decade, especially with advances in technology (being able to scan a price tag with your phone and see if another store down the street has it for cheaper), but I think with the way things are, retailers are going to be forced to be more competitive and evolve.
Eddie Lampert had an incredible record as a hedge fund manager. He has, however, not turned Sears around, nor provided aggressive actions to . Continually buying up shares is unsustainable and really - without a plan as to improve the stores - other companies continue to take share. Taking it private? Then what. Apparently the new CEO is a former tech CEO with no retail experience. Wonderful.(http://finance.fortune.cnn.com/2011/05/12/eddie-lampert-dementor/)
Sears' merchandise? (shrug). I have nothing against it. It's not a matter of the merchandise or shopping there at all - in fact, I think it's unfortunate what's happened to the brand - but not seeing the investment case at all (I didn't a year or two ago, and what's changed about the company, aside from apparently getting a CEO with no prior retail experience?) in a company that continues to take losses with no clear plan of turnaround.
I'd be very curious to hear Berkowitz make his case for Sears that goes beyond simply "Eddie Lampert". At least JC Penney brought in the guy behind the Apple stores.
One could make a better value case for the number 2 (Carrefour) and number 3 (Tesco, which Buffett recently added to and now apparently owns something like 5% of) retailers in the world, both of which were down significantly recently (especially Carrefour) and have a significant presence in many parts of the globe.
As for Sears Canada, it's actually separately traded (SEARF.PK).
Reply to @Kenster1_GlobalValue: "Sears' plans to raise cash comes as the company reported a fourth-quarter loss of $2.41 billion, or $22.47 per share."
I sold Fairholme (at a nice profit) when Berkowitz started messing with JOE's board. I saw that as nothing more than a distraction. Since then Berkowitz has lost his partner (another bad sign). Sears? Isn't that the place where America used to shop? Fairholme currently is simply benefitting from a rotation into financials by institutions, but I view that as temporary and a selling opportunity.
I "sold" FAIRX last week with the idea that I would take a tax loss now and slowly move back into FAAFX. I didn't make money like tgeno, but I cut my losses to an acceptable level.
Yes it was market timing, but I didn't have the cash/margin available to switch from FAIRX to FAAFX on the same day. And I felt like after January's run, it was much more likely for FAIRX/FAAFX to drop 10% than go up another 10%.
Of course I didn't expect events like SHLD reporting a loss of $22.47 per share *and* going up 18% on the same day. Go figure. But that's okay -- I was prepared to miss out on some rallies for some downside protection.
I've had a lot of time to reconsider other options like FPACX or YACKX and other focused funds. In the end, I read Berkowitz's reports and listen to his interview and I still like his style and commitment. He can certainly strike out but he also knows how to hit home runs. Time will tell but I think he will make money for disciplined investors.
Reply to @tgeno: Do I agree with you that having to straighten out a company like St Joe and run a multi-billion dollar mutual fund is stretching things a wee bit thin? Yeah, absolutely. However, I still kinda think that St Joe can be turned into something interesting, but it will take a looooooooong time (and beyond it taking a long time, a lot of things can happen in that time in the world economy and whatnot) and I think in the market you have today, when it's not a transformation that's going to happen overnight, a lot of people throw up their hands and move on. When the whole thing started, I thought about things like water rights, hydroelectric (if there's lakes/rivers and whatnot on the land, which I'd have to imagine there is) maybe things like carbon credits (?), things like bringing in Genting Group (who instead went to Miami and now are running into resistance for their planned casino, but are still apparently building a resort that will probably be one of the largest in the country.)
They recently announced that they are leasing some land to a shipbuilding company. Step in the right direction and again, it will likely take more time than most people are willing to give it. I'm not sure if it will become Berkowitzshire Hathaway any time soon, but it is a small enough operation and can buy enough time to probably turn the thing around into a largely different operation ("one of largest landowners in Florida, signaled that it is scaling back development plans again, an indication that its efforts to turn the state's Northern Gulf Coast into a cluster of luxury second-home communities have been a flop." - http://online.wsj.com/article/SB10001424052970203363504577187293030118950.html?ru=yahoo&mod=yahoo_hs). However, those who believe in the guy and who have portfolio space to devote to something that make take years to really move - it's interesting. Oddly, and it's probably just me, I'm more curious about what Berkowitz can do within a particular company than FAIRX (at least at this point.)
Finally, St Joe is trading at the lowest level since 1996 and a little under the worst level of 2008. I'd been watching it for a while, but I'm actually kinda interested at this point.
Reply to @scott: You've certainly given a lot of thought to JOE, but to me it sounds like rationalization, trying to convince yourself of reasons to buy a stock that's pure spec and still heading south. I've been following JOE since Peter Rummell took it over and failed to turn it around. My interest stems only from the fact that I knew Rummell and I live in Florida. Other than that, I wouldn't touch this stock. Even with 30% cash in my portfolio, I don't have the patience to wait out the years it will take to turn this company around. Also, Berkowitz is no Buffett.
Reply to @tgeno: I don't think Berkowitz is Buffett either and JOE isn't high on my shopping list (and again, I think putting out a PR like they did a few weeks ago on a Friday afternoon is pretty low.)
I'd rather look at Tesco or Carrefour as turnaround plays, but I think my thought with JOE is that how much has already been discounted and that any real, solid piece of good news could cause a move in the short-term (although there's obviously a long road for anything substantial to happen.)
I tend to think there's value to the land especially if it could be creatively repurposed, but who knows, maybe not. It is something that I haven't looked at in greater depth yet and I've heard a lot of debate about the land quality, but I keep pondering looking more closely at it as a long-term speculative play with the belief that Berkowitz could work the situation out over 3-5+ years. Thankfully I'm still pondering it after starting to think about it at $20.
Again though, it's a matter of how much time one wants to devote to something that could take ages. I bought shares in a Greek resort property developer for 35 cents a few weeks ago (they were almost $4 four-to-five years ago. ) At 35 cents a share, I can certainly wait a while. lol.
I think you are correct that Berkowitz is no Buffet. He just doesn't have the longevity to be listed on a par with Buffet. But if you look at a 10 year performance record, Berkowitz comes out on top. Granted, he misjudged financials and got in a year to soon, but take away that one bad year and Berkowitz actually blows Buffet away in that 10 year period.
I'm not throwing stones at Buffet. He's obviously one of the greatest investors in history. I just think Berkowitz has been overly chastised for one bad year. What great manager hasn't made mistakes?
Anyway, I've never owned FAIRX, but I did buy FAAFX last year. I'm just now above water on the plus side for that investment, but I see it as a long term holding with a very good manager at the helm.
Hi Maurice, I hope that Bruce learned a lesson from last year and that he will raise the min initial investment of FAIRX to $25,000 (like the rest of his funds) or even close it. My preference is not to have performance chasers piling into the mutual funds I own. They should invest in etfs instead. Not sure how much the redemptions hurt performance last year. I admire Withman for increasing the expense ratio for new third avenue members as people bailed on him in 08. The time to bail on MF is near the top and not near the bottom. People who stick with mutual funds through thick and thin should be treated with a little respect in my mind. Mutual fund managers need to keep performance chasers away. With a small asset, Berkowitz can also be more flexible. Money and kiplinger droped FAIRX from their money 70 and kip 25. We shall see how long FAIRX outperforms this year.
Based on a rough back of the envelope claiuatcon, the stock trades at a p/e ~15. This isn't bad for an Asia focused insurance company. Some may even use the word cheap.
Comments
Short % of Float (as of Jan 13, 2012)3: 60.00%
...and a few large institutional shareholders (see also: Blackrock and Janus, among others), any decent news could cause a pretty large short squeeze (see Sears.)
I'm also using PFF (iShares US Preferreds ETF) as a more cautious way to get financials exposure as this ETF is packed with financial firms including banks....and I'll gladly take the 6+% yields it produces.
http://us.ishares.com/product_info/fund/overview/PFF.htm?fundSearch=true&qt=PFF
However, as one who questioned why anyone in their right mind would want to own Sears on fundalarm when it was over $100 a share (and got a ton of upset responses - "OMG, it's a value stock!"), I'll continue to say that Sears is not sustainable in its current form - and buying back shares/creating short squeezes does nothing to fix Sears and K-Mart stores - two brands whose interest from consumers continues to erode. This morning from Fitch on retail:
10:45 AM ET Fitch: Sears Continues To Be Weakest Performer In Group
Dow Jones
I will gladly reconsider my opinion on Sears once Eddie Lampert actually comes up with a plan to try to restore a classic American brand rather than another round of buybacks (almost all of which was bought higher/much higher) As for taking the company private, I'm genuinely curious as to the "then what?" of that plan.
Meanwhile, other companies continue to take market share from Sears.
As for Fairholme, I continue to like the less-discussed aspects of the portfolio, such as the Asian insurers and Brookfield Asset Management, as well as to a lesser degree Leucadia. There's also the tiny investment in JZ Capital Partners.
They share the same name but I guess Sears Canada management is still separate from Eddie Lampert's Sears in the US.
However, I did find some Hankook tires at a Sears Centre I needed about a year ago. Their Land's End line serves a niche market --- for example, my daughter's private preschool uniforms with logos are done thru Land's End/Sears and they're not cheap either.
So Scott - you don't buy your spiffy Suits and shiny work shoes from Sears? LOL.
From the perspective of value, I think there's value in the real estate but not as much value as some believe there to be. I do believe that retail will be increasingly competitive in the next decade, especially with advances in technology (being able to scan a price tag with your phone and see if another store down the street has it for cheaper), but I think with the way things are, retailers are going to be forced to be more competitive and evolve.
Eddie Lampert had an incredible record as a hedge fund manager. He has, however, not turned Sears around, nor provided aggressive actions to . Continually buying up shares is unsustainable and really - without a plan as to improve the stores - other companies continue to take share. Taking it private? Then what. Apparently the new CEO is a former tech CEO with no retail experience. Wonderful.(http://finance.fortune.cnn.com/2011/05/12/eddie-lampert-dementor/)
Sears' merchandise? (shrug). I have nothing against it. It's not a matter of the merchandise or shopping there at all - in fact, I think it's unfortunate what's happened to the brand - but not seeing the investment case at all (I didn't a year or two ago, and what's changed about the company, aside from apparently getting a CEO with no prior retail experience?) in a company that continues to take losses with no clear plan of turnaround.
I'd be very curious to hear Berkowitz make his case for Sears that goes beyond simply "Eddie Lampert". At least JC Penney brought in the guy behind the Apple stores.
One could make a better value case for the number 2 (Carrefour) and number 3 (Tesco, which Buffett recently added to and now apparently owns something like 5% of) retailers in the world, both of which were down significantly recently (especially Carrefour) and have a significant presence in many parts of the globe.
As for Sears Canada, it's actually separately traded (SEARF.PK).
But I think I'm getting out of the market altogether anyway.
(Feb 23, 2012)
Holy ****.
Yes it was market timing, but I didn't have the cash/margin available to switch from FAIRX to FAAFX on the same day. And I felt like after January's run, it was much more likely for FAIRX/FAAFX to drop 10% than go up another 10%.
Of course I didn't expect events like SHLD reporting a loss of $22.47 per share *and* going up 18% on the same day. Go figure. But that's okay -- I was prepared to miss out on some rallies for some downside protection.
I've had a lot of time to reconsider other options like FPACX or YACKX and other focused funds. In the end, I read Berkowitz's reports and listen to his interview and I still like his style and commitment. He can certainly strike out but he also knows how to hit home runs. Time will tell but I think he will make money for disciplined investors.
I do not, however, like Friday afternoon (after close) releases like this one that came out from the company a few weeks ago: http://finance.yahoo.com/news/The-St-Joe-Company-Adopts-New-bw-1466860541.html?x=0
They recently announced that they are leasing some land to a shipbuilding company. Step in the right direction and again, it will likely take more time than most people are willing to give it. I'm not sure if it will become Berkowitzshire Hathaway any time soon, but it is a small enough operation and can buy enough time to probably turn the thing around into a largely different operation ("one of largest landowners in Florida, signaled that it is scaling back development plans again, an indication that its efforts to turn the state's Northern Gulf Coast into a cluster of luxury second-home communities have been a flop." - http://online.wsj.com/article/SB10001424052970203363504577187293030118950.html?ru=yahoo&mod=yahoo_hs). However, those who believe in the guy and who have portfolio space to devote to something that make take years to really move - it's interesting. Oddly, and it's probably just me, I'm more curious about what Berkowitz can do within a particular company than FAIRX (at least at this point.)
Additionally, there's still a massive short interest in St Joe.
http://seekingalpha.com/article/335831-the-st-joe-company-s-short-interest-is-off-the-charts?source=yahoo
Finally, St Joe is trading at the lowest level since 1996 and a little under the worst level of 2008. I'd been watching it for a while, but I'm actually kinda interested at this point.
I'd rather look at Tesco or Carrefour as turnaround plays, but I think my thought with JOE is that how much has already been discounted and that any real, solid piece of good news could cause a move in the short-term (although there's obviously a long road for anything substantial to happen.)
I tend to think there's value to the land especially if it could be creatively repurposed, but who knows, maybe not. It is something that I haven't looked at in greater depth yet and I've heard a lot of debate about the land quality, but I keep pondering looking more closely at it as a long-term speculative play with the belief that Berkowitz could work the situation out over 3-5+ years. Thankfully I'm still pondering it after starting to think about it at $20.
Again though, it's a matter of how much time one wants to devote to something that could take ages. I bought shares in a Greek resort property developer for 35 cents a few weeks ago (they were almost $4 four-to-five years ago. ) At 35 cents a share, I can certainly wait a while. lol.
I think you are correct that Berkowitz is no Buffet. He just doesn't have the longevity to be listed on a par with Buffet. But if you look at a 10 year performance record, Berkowitz comes out on top. Granted, he misjudged financials and got in a year to soon, but take away that one bad year and Berkowitz actually blows Buffet away in that 10 year period.
I'm not throwing stones at Buffet. He's obviously one of the greatest investors in history. I just think Berkowitz has been overly chastised for one bad year. What great manager hasn't made mistakes?
Anyway, I've never owned FAIRX, but I did buy FAAFX last year. I'm just now above water on the plus side for that investment, but I see it as a long term holding with a very good manager at the helm.
Prinx