In Bruce Berkowitz of the Fairholme Fund put 18% of his portfolio into AIG. Investors should have been paying attention as it subsequently. FORTUNE — With AIG stock cratering nearly 50% this year, all eyes have turned to investor Bruce Berkowitz, AIG’s largest private shareholder. Bruce Berkowitz (Trades, Portfolio): As we have written in all of our letters, we bought AIG at substantial discount to tangible book value.
|Published (Last):||7 August 2011|
|PDF File Size:||4.55 Mb|
|ePub File Size:||7.38 Mb|
|Price:||Free* [*Free Regsitration Required]|
In he set up Fairholme Bruve, which managed three mutual funds and acted as an investment advisor to long-only institutional funds. Subscribe to ValueWalk Newsletter.
Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. This copy is for your personal, non-commercial use only.
In other words, it’s time for fund owners to shoulder the cost of Faireholme’s successful bet on a risky company. This helped him outperform his peers in He expected the Treasury stake to be sold berkowotz book value, but it was ultimately sold back to the market at a deep discount.
Bruce Berkowitz Comments on AIG –
We determined that it was an opportune time to realize the gain and began to reduce the position in AIG common stock. Shorts, cash positions, brkce investments and other assets are not included. The year-old fund manager looked especially smart last year while amassing 40 million shares of the insurance giant.
For non-personal use or to order multiple copies, please contact Dow Jones Reprints at or visit www. Why he turned out to be wrong on the U. Cashflow is King Berkowitz is a contrarian investor and invests in companies with reliable cashflows that are trading brucd attractive levels relative to those cashflows.
He, therefore, tends to hold highly concentrated portfolios — in his positions berkoaitz Fannie Mae and Freddie Mac made up 36 percent of the fund.
Bdrkowitz also uses relatively high cash holdings to limit volatility. SHLD for many years, having first invested in Bruce Berkowitz is the founder and president of Fairholme Funds and a well-known value investor.
Berkowitz is a contrarian investor and invests in companies with reliable cashflows that are trading at attractive levels relative to berkkwitz cashflows. Barron’s Bill Alpert wrote, back inthat one oddball hire in particular was partly to blame for lackluster performance in recent years. For the best Barrons.
Bruce Berkowitz Comments on AIG
All Rights Reserved This copy is for your personal, non-commercial use only. Instead of the U. The significance of his miscalculation is obvious: It became apparent last year that the government would begin unloading its stake in the first half of Fairholme Funds now manages the The Fairholme Fundan equity fund, as well as an income fund and a multi-asset fund.
Berkowitz was mum on AIG AIG this year until yesterday, when the Wall Street Journal first reported that he took his lumps and told his investors in a conference call that he had made a critical error.
Whether AIG is rehabilitated remains to be seen. Thank you This article has been sent to. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http: In he moved to Lehman Brothers and then relocated back to New York with the same firm. By Scott Cendrowski May 10, Qualifying assets include long positions in U. If the marketplace understands that the Treasury is not going to be forced to sell bruec position at a poor price, then the value of the company will start to be judged berkowiyz upon its intrinsic value rather than a constant focus on the stock overhang.
He then joined consulting firm Strategic Planning Institute.
How Bruce Berkowitz stumbled with AIG
In he moved to Smith Barney Investment Advisors where he was a managing director. Berkowitz bets on the jockey as much as on the horse; he looks for companies that are built to survive in berokwitz environment with strong management. Do you think that will happen with AIG?
Berkowitz was a senior portfolio manager at Lehman Brothers. We’ve detected you are on Internet Explorer. Funds are required to distribute those gains to their shareholders, who, in turn, must pay taxes on them. But the plan fizzled. The stock had been the fund’s largest holding, and, at times in recent befkowitz, comprised nearly half of the fund’s portfolio. Capital gains are generated inside a fund when a manager sells winning positions. While his performance between berkowtz was lauded, he, along with other value investors have also struggled since then.
He is not afraid to make regular changes to the portfolio as market conditions change. We respect your privacy no spam ever. This strategy worked well in the mid s when he held outsize positions in energy stocks, but has hurt performance since then. He is a strong believer sig business cyclesand looks for companies that are out of favor due to the current business cycle. AIG headquarters office stands in New York. Never Miss A Story!
Berkowitz’s AIG Sale To Result In Huge Taxable Distribution – Barron’s
Article by Brian Dentino, Finbox. And secondly, many value investors have brruce in a market fuelled by easy money which has favored momentum and growth stocks. AIG is taking to the road this week to entice prospective investors. However, since his fortunes have not faired as well, and he has suffered long periods of underperformance.
You can get the latest data on the holdings discussed below at the Fairholme Capital page.