Every quarter, many money managers have to disclose what they've bought and sold, via 13F filings. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at investing giant Bruce Berkowitz. He's the founder of Fairholme Capital Management, which oversees three mutual funds of interest: The flagship Fairholme Fund (FAIRX) seeks long-term growth of capital, the Fairholme Focused Income Fund (FOCIX) seeks current income, and the Fairholme Allocation Fund (FAAFX) seeks long-term total return. The funds are all rather focused, each owning less than two dozen holdings instead of the hundreds that many funds own.
The Fairholme Fund has many admirers, and Berkowitz was named Morningstar's fund manager of the decade. But the fund has faltered recently, having made some seemingly risky big bets. Berkowitz has some controversial holdings, such as Florida real estate company St. Joe
The company's reportable stock portfolio totaled $6.9 billion in value as of June 30, 2012. Its top three holdings are AIG, representing a whopping 41% of the portfolio, Sears Holdings, with 15%, and Bank of America, at 12%.
So what does Fairholme's latest quarterly 13F filing tell us? Here are a few interesting details:
Fairholme's only new holding is a small stake in Hartford Financial Group
Among the few holdings in which Fairholme increased its stake, albeit slightly, was Jeffries Group. Jeffries is partially owned by Leucadia (another major Fairholme holding). My colleague Michael Lewis has called Jeffries "a phenomenal bank," adding, "Jefferies also hired aggressively, poaching top talent from shops such as Pimco and Deutsche Bank. With revenues on the rise, Jefferies can be an incredible value driver for Leucadia."
Fairholme reduced its stake in companies such as bond insurer MBIA
Berkshire Hathaway, meanwhile, has gained about 18% over the past year, and a recovering economy will benefit many of its businesses, such as its massive Burlington Northern railroad, which transports goods across the country, and its many housing-related companies (involved in furniture, flooring, paint, bricks, home sales, and even manufactured homes). To some of our analysts, the stock looks cheap.
Finally, Fairholme unloaded a couple of companies, including Regions Financial
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13F forms can be great places to find intriguing candidates for our portfolios.
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And to learn more about the most-talked-about bank out there, check out our in-depth company report on Bank of America. The report details Bank of America's prospects, including three reasons to buy and three reasons to sell. Just click here to get access.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Berkshire Hathaway and Fairholme, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Bank of America, Wells Fargo, and Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway, Wells Fargo, and AIG. The Motley Fool has a disclosure policy.