Bruce Berkowitz (Trades, Portfolio)’s Fairholme Fund (Trades, Portfolio) (FAIRX, Financial) lagged the S&P 500 index’s 1.23% gain with a 0.91% decline for the first six months of the year. Overall, the long-term focused Fairholme has delivered an annualized return of 11.37% since its 1999 inception, versus 4.21% for the index.
Berkowitz commented on his portfolio holdings in his second quarter shareholder letter:
“Despite the progress that the Fund’s portfolio companies have made, price performance has been weak and the gulf between our estimates of intrinsic values and market prices has widened in recent months. History teaches us time and time again that investment prices can experience periods of underperformance before becoming ‘overnight successes.’ Unfortunately, we are not proven market timers. Fortunately, we have high confidence in our company-specific analyses and ample liquidity (cash and cash equivalents comprise 14.3% of the Fund portfolio), and we recognize Mr. Market’s propensity for sudden mood swings.”
As of June 30, Berkowitz’s Fairholme Fund (Trades, Portfolio) listed seven individual stocks, with 11.1% invested among various shares of embattled home mortgage lender Fannie Mae (FNMA, Financial).
Berkowitz purchased no new stocks in the second quarter, increased only two positions and significantly reduced his stake in American International Group Inc. (AIG, Financial).
Sears Canada Inc. (TSX:SCC, Financial)
Berkowitz increased his stake in Sears Canada by 20.66% to 7,743,900 from 6,417,700 held in the first quarter. He holds 7.6% of the company. The shares cost $10 Canadian dollars on average for the quarter.
Sears Canada Inc. was incorporated under the laws of Canada on Sept. 17, 1952. Sears Canada Inc. has a market cap of $736.575 million; its shares were traded at around $7.23 with and P/S ratio of 0.22.
Imperial Metals Corp (TSX:ILL, Financial)
Berkowitz increased his Imperial Metals stake by 0.84% to 4,914,300 shares from 4,823,000 shares held at the end of the first quarter. He owns 6.56% of the company. The average share price for the second quarter was $12 Canadian dollars.
American International Group (AIG, Financial)
Berkowitz reduced his AIG position by 37.08% to 11,005,500 shares from 18,502,400 shares held at the end of the first quarter. AIG is his largest holding, consuming 23.58% of the portfolio.
American International Group Inc. a Delaware corporation, founded in 1919. American International Group Inc. has a market cap of $86.04 billion; its shares were traded at around $64.53 with a P/E ratio of 11.20 and P/S ratio of 1.43. The dividend yield of American International Group Inc. stocks is 0.77%.
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