Fairholme

Why the Buffett-inspired Fairholme Fund just ditched Berkshire Hathaway. It's not often you give one of your idols his walking papers. But that's what happened in late 2008 when Bruce Berkowitz of  Fairholme (FAIRX) eliminated his stake--once as high as 20% of assets--in  Berkshire Hathaway (BRK.B). Berkowitz doesn't think Buffett is washed up. Far from it. But he's taking the Oracle of Omaha at his word. Buffett himself says Berkshire's size makes it unlikely the firm will return better than a percentage point or so more than the S&P 500 going forward.

Bruce Berkowitz of Fairholme Capital Management discusses what's next for the markets.

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Recent SEDAR filings show that Fairholme (lead by Bruce Berkowitz) has bought Clarke Inc.

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Since the inception of the Fairholme Fund (FAIRX), right at the end of 1999, the fund has returned a cumulative 240%, through June 30, 2008.  On an annualized basis,  those are returns of 15.5% per year. The principal manager of the Fairholme Fund is Bruce Berkowitz. 

Berkowitz likes to talk about how Fairholme tries to turn every business into the “corner grocery store.”  I find it a simple, and useful, mental exercise to go through when analyzing the free cash flow of my companies.

Bruce Berkowitz of Fairholme Fund recently appeared on Consuelo Mack's WealthTrack where he recommended buying WellCare Health Plans, Inc. (WCG).

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Bruce Berkowitz, who oversees $6.7 billion in assets as president of Fairholme Funds, talks with Bloomberg's Matt Miller from Miami about his investment strategy, U.S. stock market volatility and holdings in WellCare Health Plans Inc. and Sears Holdings Corp. Bloomberg's Erik Schatzker also speaks.

As manager of the $6.8 billion Fairholme fund, which he launched in 1997, Bruce Berkowitz is on the hunt for undervalued companies with strong managers and plenty of free cash. Rather than building a traditional, diversified portfolio, Miami-based Fairholme—named after a street Berkowitz once lived on—concentrates its resources on a limited number of positions, a strategy that has led to impressive returns. Fairholme boasts annualized returns of more than 20 percent over the past five years and has returned nearly 2 percent so far in 2008—despite the nasty market.

Fairholme Fund’s 2007 calendar-year performance of 12.35% outperformed the S&P 500 Index performance of 5.49% (with dividends reinvested).

Fairholme Capital Management is a well-known investment advisor founded by value investing guru Bruce Berkowitz. Fairhome typically invests in a few companies at a time, looking for undervalued firms with solid management.

Fairholme's website says that the fund avoids "faddish companies, industries, or trends," while looking for firms with "conservative accounting procedures" and "sustainable competitive advantages," attributes that will be familiar to followers of Buffett as well.

Bruce R. Berkowitz of Fairholme Capital Management and Fairholme Funds buys a stake in WellCare Health Plans, Inc.

Read SEC Filing.