A few months ago, my former editor dubbed Bruce Berkowitz the bizarro Warren Buffett. However you want to characterize him, this manager of the Motley Fool Champion Funds-recommended Fairholme Fund (Nasdaq: FAIRX ) is a revered stock picker across Fooldom. Just look to his pre-meltdown rotation out of energy stocks like Canadian Natural Resources (NYSE: CNQ ) and into beaten-down health-care players like Pfizer (NYSE: PFE ) and UnitedHealth Group (NYSE: UNH ) for the latest example of his ability to ignore the crowd.
Berkowitz is frequently interviewed and quoted by financial publications, so it's not accurate to say that he keeps a low profile. However, having skimmed through his firm's SEC filings, I can't find a single example of his having publicly scolded a portfolio company via a Schedule 13D filing.
Until yesterday, that is.
As a result of United Rentals' (NYSE: URI ) tender offer, which drastically reduced the firm's outstanding share count this past summer, in combination with a recent buying frenzy by Fairholme Capital, Berkowitz suddenly finds himself sitting on a roughly 19% stake in the leading rental equipment firm. Despite the fact that Fairholme is in no way, shape, or form an "activist" investor, United has taken the unusual step of dropping the triggering threshold of its poison pill to 15% ownership. The new provisions preclude Berkowitz and his boys from buying more shares, and he's expressed his dissatisfaction in a civil but strongly worded letter to the board of directors.
You may recall that, along with SLM (NYSE: SLM ) and Harman International (NYSE: HAR ) , United Rentals is one of the firms that got burned when the leveraged-buyout market went bust. Since seeing a $34.50 cash offer from Cerberus Capital evaporate, you can imagine that the firm is feeling vulnerable to value vultures.
Still, blocking a passive outside investor like Fairholme makes absolutely no sense. By stomping on shareholder rights in the name of, er, "shareholder rights," United Rentals is alienating its potentially largest ally in any hostile takeover attempt by a third party!
I know these are scary times, but seriously, United Rentals -- what are you thinking?