Bruce Berkowitz's biggest position in his flagship Fairholme Fund is AIG (NYSE:AIG). Between shares of its common stock and warrants, AIG makes up almost 40% of his fund. His basic thesis, as stated in his latest shareholder letter: "There are few occasions when systemically important franchises sell for half of book value and are profitable. This is one of those times." He's basically saying it's too big to fail and it's cheap. Is it really that simple? Fool analyst Anand Chokkavelu weighs in.

With so many of the big financial firms getting bad press these days, you may be inclined to stay away from the sector entirely, but that could be a huge mistake. In fact, some of the best opportunities over the next few years can be found there, including one small, under-the-radar bank. It’s been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in our exclusive free report. Just click here to keep reading