Underground Journal

Bruce Berkowitz – Get To Know Him

With the success of the Fairholme Fund over the last few years, the strategies practiced by founder Bruce Berkowitz have been closely watched and emulated by investors everywhere.  Since the late 1990′s, the Fairholme Fund’s solid returns has been based on a philosophy of going into sectors that the mainstream thinks are devoid of high performing companies.

This contrarian view has often set pundits and commentators to speculate about the nature of the funds investments, and Bruce Berkowitz has answered many a directed question regarding the nature of an opportunity seized.

The basis behind the choices the fund has made in the past, such as jumping into healthcare for a time with UnitedHealth Group and others, is to find the best value for the money.  In terms of investments this means that Bruce Berkowitz wants a company that is undervalued but has great cash flow.
The potential to generate cash flow combined with a discount price could also lead the Fairholme Fund to buy up the company, so long as the value remains.  An example of this is dumping the size of their stake in Pfizer.  Despite excellent prospects for generating ever greater sums of cash, the value of the stock and idiosyncrasies in the pharmaceutical industry caused them to re-evaluate their position.

The style of investing embodied by Bruce Berkowitz and the Fairholme Fund could be termed value investing.  Typically this style of investing means a greater focus on quality instead of quantity for the sake of diversification.  Bruce Berkowitz has managed his fund to as much as a 268% cumulative return over the last ten years, and has garnered numerous awards for his performance, including the Morningstar award for ‘Fund Manager of the Decade.’

Bruce’s success can be attributed to several factors, including a willingness to have cash on hand, and to take calculated risks on the best ideas.

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