The phrase "the next Warren Buffett" is probably as played in the investing world as "the next Michael Jordan" is in hoops. Let's not kid ourselves, though: There is as much a chance of a "next" Warren Buffett as there is of a "next" Michael Jordan. That chance? 0%.
But that's not to say that world-class investors -- even world-class value investors -- aren't already out there, earning oodles of money in his formidable shadow.
Meet the Bizarro Buffett
My favorite fund manager, and the person to whom I direct the largest portion of my 401(k) contributions, is both a Buffett wannabe and the anti-Buffett.
Like Buffett, The Fairholme Fund's Bruce Berkowitz is a stock picker among stock pickers. Since his fund's launch in 1999, the value-driven Berkowitz has steered Fairholme to a near-200% gain while the S&P 500 has essentially treaded water. And over the past five years, the Fairholme Fund has returned an annualized 14.9%, roughly double that of the S&P 500.
The comparisons don't stop with those outstanding returns. Like Buffett, Berkowitz:
- Has a significant amount of his personal wealth in his fund.
- Runs a no-frills enterprise -- his expense ratio is just 1%.
- Has a penchant for investing in great businesses with great leaders.
Unlike Buffett, however, there is a bit of flash to Berkowitz's game. Buffett makes his home in Omaha in order to stay away from the hustle and bustle. Berkowitz and his enviable tan operate in Miami. Buffett is folksy. Berkowitz exudes confidence. And I won't even get into the accents.
But despite their superficial differences, they share a remarkably similar approach to investing. Take a look at the top holdings in the Fairholme portfolio as of its last 13-F filing:
|
Company |
|---|
|
Berkshire Hathaway |
|
Canadian Natural Resources |
|
Sears Holdings |
|
Dish Network |
|
St. Joe Company |
|
WellPoint |
|
Leucadia |
|
Mohawk Industries |
Like Buffett, Berkowitz is a dyed-in-the-wool value type who takes serious, concentrated bets on deeply out of favor companies -- and he also invests in Buffett himself.
The Foolish bottom line
Like Buffett, Berkowitz buys great companies at good prices. The Fairholme Fund, like most other deep value plays, has stumbled a bit this year, but I expect the current choppy market environment will offer him the chance to make some explosive returns over the next several years.
Given the Fairholme Fund's incredible track record, it probably wouldn't surprise you to learn that it's one of our Motley Fool Champion Funds recommendations. Since the Champion Funds service started in 2004, the average fund recommendation has provided a total return of nearly 24% versus only 3% for the S&P 500.
Want to see who else is providing market-beating returns? Try out Champion Funds with a free 30-day trial -- with no obligation to subscribe. Click here to get started.
Joe Magyer is an investor in the Fairholme Fund, but does not own shares of any other companies or funds mentioned in this article. USG and WellPoint are Inside Value recommendations. Berkshire Hathaway is an Inside Value and Stock Advisor recommendation. The Motley Fool owns shares of Berkshire Hathaway. The Motley Fool's disclosure policy drank ... your ... milkshake!
