Following Bruce Berkowitz recently became a little more fun, thanks to his spat with David Einhorn over the value of real estate developer St. Joe (NYSE: JOE). After Einhorn's now-infamous presentation at the Value Investing Conference knocking the company, Berkowitz offered to send Einhorn a "box of chocolates" for making its stock cheaper. Berkowitz also added more than 135,000 shares to his large position in the company. However, the bet hasn't paid off; since he purchased the additional shares on Oct. 13, the stock has declined an additional 19%.

While Berkowitz's feud and sideshow with Einhorn has been one of his worst bets to date, his overall track record is hard to ignore. He also manages his fund a bit differently than most mutual fund managers. Berkowitz holds a lot of cash, making large, concentrated bets when he has a strong belief in a company's prospects. This has helped his Fairholme Fund return an average of 9% over the last five years, while the S&P 500 returned an average of close to 2% during the same time period.

According to the Fairholme Fund's most recent SEC filings, Berkowitz did not make many changes to the largest positions in his portfolio during the third quarter. He added very few shares to each of his top three positions AIG (NYSE: AIG), Sears (Nasdaq: SHLD), and Citigroup (NYSE: C). The largest additions Berkowitz made to the fund were in shares of Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS), increasing his positions by more than 30% and 123%, respectively.

Just one addition
Berkowitz started only one new position during the third quarter, but the pick is surprising nonetheless. Fairholme purchased more than 14 million shares of onetime American icon General Electric (NYSE: GE). The industrial giant is among the top 10 American companies by market capitalization, but the financial crisis took away some of its shine.

Personally, it's hard for me to find a lot to like about GE right now. The company has been a big beneficiary of the economic stimulus package, and of a U.S. government in general that has piled on debt over the last decade. If threatened spending cuts actually become reality in the U.S., GE could lose substantial amounts of revenue. Meanwhile, the company still has huge amounts of debt and remains fairly highly leveraged.

On the other hand, Berkowitz clearly sees value that I may not. Perhaps it's the improvement in the company's once extremely troubled financial arm. GE Capital has seen its loan portfolio bounce back as losses shrink. Citigroup even put out a report last month stating its belief that the finance arm will create more than 50% earnings growth next year for the company.

It will be interesting to see how Berkowitz's out-of-favor picks St. Joe and General Electric perform over the coming months. He's beaten the market routinely by picking downtrodden stocks that almost no one wants to own. St. Joe and General Electric are certainly not sexy, but they might be by the time Berkowitz is ready to sell.

Do you agree with Berkowitz's top picks? Let us know in the comment box below.

Andrew Bond owns no shares in the companies listed. You can follow Andrew on Twitter @Bond0 or on his RSS feed. The Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. The Fool has a disclosure policy.