Ex Fairholme employee - New Fund

[Guest]

http://online.wsj.com/article/SB10001424052748704678004576090363448990754.html?mod=googlenews_wsj

 

 

Something to keep an eye on.

[Parsad]

Looks like Markel is backing them partly.  Cheers!

[Guest]

Looks like Markel is backing them partly.  Cheers!

Yep. Saw that. If Gaynor and company like them, it's something that might interest others, too. :)

[Parsad]

I think Gaynor & Company like the money management business (high returns, very low capital expenditures), and if you can find a good horse...well!  ;D  Cheers!

[txlaw]

Does anybody know whether there was a falling out between Pitkowsky/Trauner and Berkowitz?  Or did they leave on good terms?

 

Also, does anybody else think it's weird that they decided to name their fund GoodHaven?  FAIR HOME, GOOD HAVEN?  Is that a sign of respect or are they taking a shot at Berkowitz?

 

I ask because I am pretty sure there are some high net worth individuals on this board who have had money invested with Fairholme Capital Management and who might know the back story.

[BargainValueHunter]

Does anybody know whether there was a falling out between Pitkowsky/Trauner and Berkowitz?  Or did they leave on good terms?

 

Also, does anybody else think it's weird that they decided to name their fund GoodHaven?  FAIR HOME, GOOD HAVEN?  Is that a sign of respect or are they taking a shot at Berkowitz?

 

I ask because I am pretty sure there are some high net worth individuals on this board who have had money invested with Fairholme Capital Management and who might know the back story.

 

http://www.mfwire.com/article.asp?template=article&storyID=35787&wire=MFWire&wireID=2&bhcp=1

 

For his part, Bruce Berkowitz is not involved in the new firm but, in a statement, gave the pair his blessing.

 

 

[TorontoRaptorsFan]

I think once Berkowitz brought his brother-in-law on board (Charles Fernandez) the other two managers saw their roles diminished. It's kind of hinted of in the Fortune article which came out several weeks ago.

I'm sure it didn't help that Berkowitz was getting all the credit and also making a lot of money for himself.

[BargainValueHunter]

http://www.reuters.com/article/2012/11/14/hedgefunds-barnstar-idUSL1E8ME3FT20121114

 

Fernandez is launching Barnstar Opportunities on Wednesday, which he calls a multi-disciplinary, special situations long bias fund, according to a press release.

 

Thirteen months ago, Fernandez made headlines when he unexpectedly resigned from Fairholme at a time when the once-vaunted fund was suffering heavy losses and investors began pulling their money in a hurry.

 

Analysts blamed huge bets on unpopular stocks like insurer American International Group and real estate developer St. Joe for the fund's slump, which left investors with a 32.4 percent loss last year.

[Guest rimm_never_sleeps]

Does anybody know whether there was a falling out between Pitkowsky/Trauner and Berkowitz?  Or did they leave on good terms?

 

Also, does anybody else think it's weird that they decided to name their fund GoodHaven?  FAIR HOME, GOOD HAVEN?  Is that a sign of respect or are they taking a shot at Berkowitz?

 

I ask because I am pretty sure there are some high net worth individuals on this board who have had money invested with Fairholme Capital Management and who might know the back story.

 

I believe that bb owns 100% of fcm. the other two guys were adding value when the fund was very small. at some point after early success, bb wanted to get into the big leagues and thought he didn't need them; so he reduced their roles. By moving them to obscure and vague roles, I believe bb was sending them a message that he thought they should look for something else outside of fcm. bb did not fire them and their repuations remained intact thanks to the way bb handled things. it took them a couple of years to move on. but they landed on their feet and are doing well.

 

the cf hiring surprised everyone because nobody had ever heard of him. yet bb raved about him. and it looks like he did add value during the downturn and structuring some nice deals coming out of it. I believe cf may be more than partly responsible for bb getting into financials too "early". and the stress as the position went wildly against them became unbearable. cf left almost at the very bottom. it was a great contrary indicator and emblematic of Templeton's moment of maximum pessimism.

 

my own sense is that bb is one these guys who is probably a really brilliant guy but very difficult to work with on a team or to work for on a team. He presents himself well in public, but seems to be of the "control freak" variety. no inside knowledge. just my opinion and observations.

 

btw, don't underestimate the value of timing the start of your fund. bb did this brilliantly. a lot of insurance stocks were trading under book in 2000. 2000 was a great time to start a value oriented mutual fund. much like starting one in 2009 would have been a great idea.

[rjstc]

I believe Markel also made a significant investment in GoodHaven.

 

I wonder also if Pitkowski/Trauner weren't on board with BB with the coming movement into things like St. Joe? It wasn't unusual for Larry or Keith to pick up the phone and talk to you when the firm had less than 1 billion. They were very approachable and conservative investors. Their focus was and is stock picking which is where their and BBs expertise was.

[BargainValueHunter]

http://www.valuewalk.com/2012/11/ex-fairholme-pm-charles-fernandez-discusses-his-value-hedge-fund/

 

In an interview with FINalternatives, Fernandez pointed out the difference between his “multi-disciplinary, special situations long-bias” fund and the deep value fund approach. He explained that his fund comes into play when the event has occurred rather than predicting the event. He told that his investment approach is to look for regulated public entities, with focus on American equities that are involved in some legal and financial trouble and there is potential that they could benefit from the solution of the difficulty.

 

The action plan used by Fernandez would be to gather a team of experts which sits down to answer fundamental questions, like how the damage can be repaired, if it is reparable at all, and whether would paying taxes or other kinds of restitution fix it. He says that this process can take anywhere from one to six months. After a favorable decision has been made about investing in the company, Barnstar will start working with the company to define ways to recover and restructure.

[nkp007]

Does anybody know whether there was a falling out between Pitkowsky/Trauner and Berkowitz?  Or did they leave on good terms?

 

Also, does anybody else think it's weird that they decided to name their fund GoodHaven?  FAIR HOME, GOOD HAVEN?  Is that a sign of respect or are they taking a shot at Berkowitz?

 

I ask because I am pretty sure there are some high net worth individuals on this board who have had money invested with Fairholme Capital Management and who might know the back story.

 

I believe that bb owns 100% of fcm. the other two guys were adding value when the fund was very small. at some point after early success, bb wanted to get into the big leagues and thought he didn't need them; so he reduced their roles. By moving them to obscure and vague roles, I believe bb was sending them a message that he thought they should look for something else outside of fcm. bb did not fire them and their repuations remained intact thanks to the way bb handled things. it took them a couple of years to move on. but they landed on their feet and are doing well.

 

the cf hiring surprised everyone because nobody had ever heard of him. yet bb raved about him. and it looks like he did add value during the downturn and structuring some nice deals coming out of it. I believe cf may be more than partly responsible for bb getting into financials too "early". and the stress as the position went wildly against them became unbearable. cf left almost at the very bottom. it was a great contrary indicator and emblematic of Templeton's moment of maximum pessimism.

 

my own sense is that bb is one these guys who is probably a really brilliant guy but very difficult to work with on a team or to work for on a team. He presents himself well in public, but seems to be of the "control freak" variety. no inside knowledge. just my opinion and observations.

 

btw, don't underestimate the value of timing the start of your fund. bb did this brilliantly. a lot of insurance stocks were trading under book in 2000. 2000 was a great time to start a value oriented mutual fund. much like starting one in 2009 would have been a great idea.

 

The bolded is definitely correct.

[PlanMaestro]

I think this is something few have recognized in the recent Buffett and Berkowitz picks.

 

We focus on companies that are regulated entities, because when you have a regulated entitity, when they get a dislocation there's a lot of publicly available information and there are a lot of professionals that you can engage to analyze, and there's a lot of transparency if you can really get the right people to analyze how much damage there is. Is it going to put the company out of business? Is it something the company can recover from? Is it something that spending a certain amount of money, such as to pay taxes, fees and other things, and restitution can fix?