Fairholme - cash outs

[bookie71]

More negative cash outflows

http://blogs.barrons.com/focusonfunds/2011/06/30/fairholme-leads-u-s-stock-mutual-fund-outflows-in-week/?mod=yahoobarrons

[gfp]

$3.2 Billion in Q2 outflows for Fairholme...  Time to buy financials!

[BargainValueHunter]

Fairholme shareholders continue to do to Berkowitz what Dr. Michael Burry's shareholders did to him...pull their investments at exactly the wrong time!

 

Gotta be extremely frustrating for a fund manager.

 

http://www.gurufocus.com/news/160240/fairholme-funds-portfolio-update-forced-to-sell-finanicals

 

Bruce Berkowitz must be making some hard decisions these days. He is forced to sell the financial stocks that he loves and has convictions in. But apparently shareholders do not agree with him. They vote with their feet, although many of them may have deep losses.

 

Fairholme Fund’s asset is down to $8 billion, about 6% of the fund is cash, as of Nov. 30, 2011. At the same time Bruce Berkowitz becomes an idiot. Just 9 short months ago, the fund had more than $20 billion and Bruce could do nothing wrong. It is amazing how fast investors piled into his funds, how fast they flee, and how quickly they change their views.

 

The fund’s redemptions must be continuing, at least until December of 2011, as the asset shrank to $7 by the end of 2011. You may wonder how those people feel as they see the strong recovery of financial stocks after the new year.

 

Fairholme Focused Income Fund, the new fund Bruce Berkowitz started at the height of his fame, shrank to $300 million. 9 months ago the fund had $455 million.

[Guest misterstockwell]

I pulled my investments in the fund at the right time, way into the 30's. When your manager gets a big head and thinks he can take over companies and run them better, it is time to bail. It was a great move.

[rjstc]

I pulled my investments in the fund at the right time, way into the 30's. When your manager gets a big head and thinks he can take over companies and run them better, it is time to bail. It was a great move.

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong.

They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing.

[Liberty]

No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing.

 

No matter how great it turns out to be? I find that statement a bit weird. Like saying that Buffett should have stayed in the hedge fund business no matter how great Berkshire turned out. (of course, Buffett's transition was cleaner and clearer to his investors, which makes a difference)

 

But I think it does matter how things turn out over a sufficiently long period of time. Short term, anything can happen, though.

[Packer16]

Its tough to our perform making large non consensus bets.  Miller tried to do it also and did not suceed.  Buffet is the only one I know that can effectively make large non consensus bets.  Most others who do well do so by buying in smaller niches.  I do have to stay Berkowitz is in the right neighborhood (Financials) as Buffet is there also.

 

Packer

[ERICOPOLY]

They sold FAIRX and bought BAC after Bruce explained to his fundholders how much BAC would look like WFC in early 1990s, but the fund is only allowed to buy 5%.

 

Okay, that's probably a small minority of his shareholders but that's what I would have done.

[racemize]

Amazing how dumb the dumb money is.  They guy was fund manager of the decade now hes a bum after one bad year.  He was early on the financials but fundamentally I think he's exactly right -- great time to plow into fairx.

 

Anyone have other ideas for a mutual fund?  I have to buy one with my 401k.

 

In my 401k, I just put a fair amount of money in the wintergreen fund--he does value investing globally, so he filled a niche I have not been using for me.  He has a good track record, but it is only 5 years.

[txlaw]

Amazing how dumb the dumb money is.  They guy was fund manager of the decade now hes a bum after one bad year.  He was early on the financials but fundamentally I think he's exactly right -- great time to plow into fairx.

 

Anyone have other ideas for a mutual fund?  I have to buy one with my 401k.

 

Yacktman appears to have the right idea in terms of buying high quality businesses at fair to good prices that will give you a decent risk-adjusted return over time.

 

And I'm not just talking about him because he "made money" last year.  Yacktman's portfolio is the type of portfolio that someone who is really rich would want to have to first preserve -- and second grow -- one's wealth without too much stress. 

[Parsad]

I pulled my investments in the fund at the right time, way into the 30's. When your manager gets a big head and thinks he can take over companies and run them better, it is time to bail. It was a great move.

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong.

They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing.

 

I think it was more of a matter of luck than anything else in making that decision.  If things had worked out, this conversation wouldn't even be happening.  So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations.  In most circumstance, it's because the investor was lucky.

 

When Prem made the bet to buy TIG and C&F, no one thought that was a bad deal at the time.  As big as the deal was, there was considerable protection in place...buying at 60-70% of book, a billion dollar reinsurance contract protecting against future losses, and paying with overvalued shares.  Yet the deal went wrong because the losses were just far greater than the reinsurance policy could cover.  Was that someone getting a big head, or just something that went wrong even though all the precautions were in place? 

 

Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early.  If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!"  Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term.  In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view.  And as I said at that time, they will be proven wrong in the long-term.  Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing!  Cheers!   

[txlaw]

I pulled my investments in the fund at the right time, way into the 30's. When your manager gets a big head and thinks he can take over companies and run them better, it is time to bail. It was a great move.

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong.

They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing.

 

I think it was more of a matter of luck than anything else in making that decision.  If things had worked out, this conversation wouldn't even be happening.  So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations.  In most circumstance, it's because the investor was lucky.

 

When Prem made the bet to buy TIG and C&F, no one thought that was a bad deal at the time.  As big as the deal was, there was considerable protection in place...buying at 60-70% of book, a billion dollar reinsurance contract protecting against future losses, and paying with overvalued shares.  Yet the deal went wrong because the losses were just far greater than the reinsurance policy could cover.  Was that someone getting a big head, or just something that went wrong even though all the precautions were in place? 

 

Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early.  If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!"  Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term.  In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view.  And as I said at that time, they will be proven wrong in the long-term.  Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing!  Cheers! 

 

Well said regarding the conventional investor's view on Berkowitz and the luck of getting out at the right time.

 

However, it's worth pointing out that the folks on this thread who have expressed pretty negative views on Berkowitz appear to be criticizing him for the investment in JOE and, specifically, for his trying to take over the company and run it better (their words, not mine). 

 

I'd like to hear more from them on why they think he's trying to run the company and whether they would have different views of him if he had not put any money into JOE.

[Parsad]

I pulled my investments in the fund at the right time, way into the 30's. When your manager gets a big head and thinks he can take over companies and run them better, it is time to bail. It was a great move.

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong.

They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing.

 

I think it was more of a matter of luck than anything else in making that decision.  If things had worked out, this conversation wouldn't even be happening.  So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations.  In most circumstance, it's because the investor was lucky.

 

When Prem made the bet to buy TIG and C&F, no one thought that was a bad deal at the time.  As big as the deal was, there was considerable protection in place...buying at 60-70% of book, a billion dollar reinsurance contract protecting against future losses, and paying with overvalued shares.  Yet the deal went wrong because the losses were just far greater than the reinsurance policy could cover.  Was that someone getting a big head, or just something that went wrong even though all the precautions were in place? 

 

Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early.  If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!"  Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term.  In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view.  And as I said at that time, they will be proven wrong in the long-term.  Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing!  Cheers! 

 

Well said regarding the conventional investor's view on Berkowitz and the luck of getting out at the right time.

 

However, it's worth pointing out that the folks on this thread who have expressed pretty negative views on Berkowitz appear to be criticizing him for the investment in JOE and, specifically, for his trying to take over the company and run it better (their words, not mine). 

 

I'd like to hear more from them on why they think he's trying to run the company and whether they would have different views of him if he had not put any money into JOE.

 

I don't think he had a whole lot of choice with JOE.  He waited for management to move things forward, and they were being attacked by Einhorn, so what could he really do except shake things up.  Prem is now on the board of RIMM...do we criticize him for being a little more hands on to protect his investment?  JOE is doing better now with Berkowitz on there, so I think he did the right thing actually.  Cheers!

[BargainValueHunter]

I pulled my investments in the fund at the right time, way into the 30's. When your manager gets a big head and thinks he can take over companies and run them better, it is time to bail. It was a great move.

I agree 100%. But you'll probably get trashed by some on this board for saying it. They think that just because someone has done great for a while that they can never do wrong.

They will sell a stock when Mr. Market pushes it stupidly high but when all that money came into Fairholme and Berkowitz decided he was going to try and be a Buffett or Lampert and it was weak money that was driving the price they would say you were stupid for selling Fairholme. He should have stuck with what he knows and what the long term investors originally bought into. No matter how great the St. Joe land development story might turn out, he should stick with what he had made his name doing.

 

I think it was more of a matter of luck than anything else in making that decision.  If things had worked out, this conversation wouldn't even be happening.  So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations.  In most circumstance, it's because the investor was lucky.

 

When Prem made the bet to buy TIG and C&F, no one thought that was a bad deal at the time.  As big as the deal was, there was considerable protection in place...buying at 60-70% of book, a billion dollar reinsurance contract protecting against future losses, and paying with overvalued shares.  Yet the deal went wrong because the losses were just far greater than the reinsurance policy could cover.  Was that someone getting a big head, or just something that went wrong even though all the precautions were in place? 

 

Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early.  If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!"  Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term.  In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view.  And as I said at that time, they will be proven wrong in the long-term.  Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing!  Cheers! 

 

Well said regarding the conventional investor's view on Berkowitz and the luck of getting out at the right time.

 

However, it's worth pointing out that the folks on this thread who have expressed pretty negative views on Berkowitz appear to be criticizing him for the investment in JOE and, specifically, for his trying to take over the company and run it better (their words, not mine). 

 

I'd like to hear more from them on why they think he's trying to run the company and whether they would have different views of him if he had not put any money into JOE.

 

I was always under the impression that Berkowitz wanted control so he could install like minded people on the board and the executive suite.

 

I don't think he ever intended to be an everyday COO. Once he found some good "cut expenses, monetize assets" type of folks he would tone down the activism.

 

Besides JOE was never a huge percentage of his holdings. I am surprised people haven't given him a hard time over his CIT (Thain) affiliation even if he is passive there.

[PlanMaestro]

Besides JOE was never a huge percentage of his holdings. I am surprised people haven't given him a hard time over his CIT (Thain) affiliation even if he is passive there.

 

CIT was cheap ($43 TBV per share) and they are strong in one of the few lending sectors that is growing at a good pace (middle market C&I). They have also been increasing their deposit funding base and are a strong candidate to be acquired by a deposit franchise. 

 

I was much more critical of his investment banking buys (Goldman, Morgan Stanley, Jefferies) with their short term funding and CAT risk. And they were not cheaper than BAC, C or CIT. But he got out of GS and MS in the latest report.

[ERICOPOLY]

Amazing how dumb the dumb money is.  They guy was fund manager of the decade now hes a bum after one bad year.  He was early on the financials but fundamentally I think he's exactly right -- great time to plow into fairx.

 

Anyone have other ideas for a mutual fund?  I have to buy one with my 401k.

 

Yacktman appears to have the right idea in terms of buying high quality businesses at fair to good prices that will give you a decent risk-adjusted return over time.

 

And I'm not just talking about him because he "made money" last year.  Yacktman's portfolio is the type of portfolio that someone who is really rich would want to have to first preserve -- and second grow -- one's wealth without too much stress.

 

And guess what Yacktman bought in Q4?

 

BAC.

 

[PlanMaestro]

BAC.

 

Yachtman made contortions to explain himself at Consuelo Mack a couple of days ago: several small positions over several banks (even Bank of America, wow). That's after saying things like this before:

 

“With a bank you create assets with a stroke of a pen. You’ve got a black box.”

 

You have to give it to him. He seems straight in the camp of changing his mind when things change (or they become cheap).

 

 

[mranski]

Berkowitz in the boardroom has some similarities to Prem in the RIM room.

Not sure i like Prem there.  Where do you draw the line?

Confirming a bad investment, I think.

If mgmt is poor, why are we buying the stock in the first place.

Makes me want to hit the sell button on FFH.

But the smart moves outweigh RIM on balance.

A profitable sale or turnaround may save the day, poor odds i think.

 

 

[Guest misterstockwell]

I think it was more of a matter of luck than anything else in making that decision.  If things had worked out, this conversation wouldn't even be happening.  So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations.  In most circumstance, it's because the investor was lucky.

 

Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early.  If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!"  Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term.  In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view.  And as I said at that time, they will be proven wrong in the long-term.  Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing!  Cheers! 

 

Well said regarding the conventional investor's view on Berkowitz and the luck of getting out at the right time.

 

However, it's worth pointing out that the folks on this thread who have expressed pretty negative views on Berkowitz appear to be criticizing him for the investment in JOE and, specifically, for his trying to take over the company and run it better (their words, not mine). 

 

I'd like to hear more from them on why they think he's trying to run the company and whether they would have different views of him if he had not put any money into JOE.

 

Yes, I was so lucky. I was lucky to buy the fund when it crashed in 08. As a short term investor, I was lucky to sell it in July of 11. I was lucky that I didn't like the  headlines of how large the fund was getting, or the concentration of huge financials that was making me uncomfortable. I was lucky he wanted to run a business rather than run his fund. I was lucky the man thought he was bigger than the market. I was lucky to make money off a fund that has a negative five year return. Yep. I am a lucky man.

[txlaw]

I think it was more of a matter of luck than anything else in making that decision.  If things had worked out, this conversation wouldn't even be happening.  So when investors think they know more than proven long-term investment managers, I'm thinking that may be the case in just a handful of situations.  In most circumstance, it's because the investor was lucky.

 

Berkowitz didn't do anything differently than he has in his past, but the bets went the wrong way because he was early.  If anyone thinks that a year or two is enough to judge a fund managers performance, than I think they are simply speaking from the obvious view of "what have you done for me lately!"  Investors on this board always talk about long-term or how they will hold forever, but when things go sideways, investors rarely think about long-term.  In Berkowitz's case, most of his "long-term" investors were thinking solely from a "short-term" view.  And as I said at that time, they will be proven wrong in the long-term.  Short-term, if they pulled their money, it was more of a matter of luck in timing, because that's exactly what it is...timing!  Cheers! 

 

Well said regarding the conventional investor's view on Berkowitz and the luck of getting out at the right time.

 

However, it's worth pointing out that the folks on this thread who have expressed pretty negative views on Berkowitz appear to be criticizing him for the investment in JOE and, specifically, for his trying to take over the company and run it better (their words, not mine). 

 

I'd like to hear more from them on why they think he's trying to run the company and whether they would have different views of him if he had not put any money into JOE.

 

Yes, I was so lucky. I was lucky to buy the fund when it crashed in 08. As a short term investor, I was lucky to sell it in July of 11. I was lucky that I didn't like the  headlines of how large the fund was getting, or the concentration of huge financials that was making me uncomfortable. I was lucky he wanted to run a business rather than run his fund. I was lucky the man thought he was bigger than the market. I was lucky to make money off a fund that has a negative five year return. Yep. I am a lucky man.

 

Okay, so you were uncomfortable with his "concentration of huge financials."  Fair enough. 

 

That does not mean you were not lucky when you say that you made "money off a fund that has a negative five year return."  Or that people who held onto FAIRX were not unlucky to see their fund go down 30%.  That's classic Mr. Market, right there.  Over the long run, I predict Berkowitz will handily outperform the market.  And there is even the possibility that his portfolio is a coiled spring that will come back rapidly in the short to medium term.

 

But what about JOE?  I'd like to hear more about your rationale in this regards?  What makes you think he's trying to run JOE?

[txlaw]

BAC.

 

Yachtman made contortions to explain himself at Consuelo Mack a couple of days ago: several small positions over several banks (even Bank of America, wow). That's after saying things like this before:

 

“With a bank you create assets with a stroke of a pen. You’ve got a black box.”

 

You have to give it to him. He seems straight in the camp of changing his mind when things change (or they become cheap).

 

Just watched that interview.

 

Yacktman's new position in banks is not necessarily inconsistent with his previous statement on banks.  Most likely, he was questioning before why the US big banks and i-banks were such a high percentage of the portfolio of some investors (e.g., Bruce B), given his thoughts on the "black box" nature of the banks.  Tons of people on this board feel the same way, although I disagree with them. 

 

Yacktman seems to be running his investment management business quite well.  His portfolio is the type that will keep his AUM fairly sticky, I think.

 

Which really brings to the forefront the issue with Fairholme.  Bruce B appears to be crafting focused portfolios for total return only, without regards to whether his investors will get spooked and pull their money out.  It appear it is in his blood to maximize return using a focused approach.  He must stay the course.

 

I like that, but I also recognize that most investors -- even sophisticated ones -- suffer from perverse psychology. 

[txlaw]

Also, I bet a large percentage of people who pulled money out of Fairholme were financial advisors who have been getting calls from their advisees regarding why FAIRX went down so much and was so concentrated in US financials.  Or perhaps they were trying to avoid extreme volatility, which one would expect with a concentration in financials.

 

After all, Barty Ritholtz -- who for some reason, has a huge following -- wrote a post specifically about firing Berkowitz for many of the reasons articulated by Mr. Stockwell.  http://www.ritholtz.com/blog/2011/04/when-do-you-fire-a-manager/

 

I guarantee you a lot of FAs thought the very same.  "Style drift" and his activities in JOE were the main criticisms I remember hearing over the course of last year.

[PlanMaestro]

Yacktman seems to be running his investment management business quite well.  His portfolio is the type that will keep his AUM fairly sticky, I think.

 

Which really brings to the forefront the issue with Fairholme.  Bruce B appears to be crafting focused portfolios for total return only, without regards to whether his investors will get spooked and pull their money out.  It appear it is in his blood to maximize return using a focused approach.  He must stay the course.

 

I like that, but I also recognize that most investors -- even sophisticated ones -- suffer from perverse psychology.

 

That is the core of the issue: Berkowitz is managing Fairholme as an owner businessman while Yachtman is more concerned about the mutual fund crowd perceptions. Yachtman is trying to find a way to buy the cheap financials without completely ignoring their perceptions as Berkowitz.

 

As an investor of my own money, I think there is more to learn from Berkowitz. But when I talk to OPM managers they tend to completely disregard financials just to avoid a battle with their investor base (and they rationalize it saying that this is a group of smart and rational people).

 

So I have to give it to Yachtman that at least is finding a crooked middle way, that he will deny until the end of times, to buy large cap financials that are not only cheap but safe. The client base does not believe the second part so he is giving these clients what they want but nudging them a little.

 

 

[Parsad]

BAC.

 

Yachtman made contortions to explain himself at Consuelo Mack a couple of days ago: several small positions over several banks (even Bank of America, wow). That's after saying things like this before:

 

“With a bank you create assets with a stroke of a pen. You’ve got a black box.”

 

You have to give it to him. He seems straight in the camp of changing his mind when things change (or they become cheap).

 

Just watched that interview.

 

Yacktman's new position in banks is not necessarily inconsistent with his previous statement on banks.  Most likely, he was questioning before why the US big banks and i-banks were such a high percentage of the portfolio of some investors (e.g., Bruce B), given his thoughts on the "black box" nature of the banks.  Tons of people on this board feel the same way, although I disagree with them. 

 

Yacktman seems to be running his investment management business quite well.  His portfolio is the type that will keep his AUM fairly sticky, I think.

 

Which really brings to the forefront the issue with Fairholme.  Bruce B appears to be crafting focused portfolios for total return only, without regards to whether his investors will get spooked and pull their money out.  It appear it is in his blood to maximize return using a focused approach.  He must stay the course.

 

I like that, but I also recognize that most investors -- even sophisticated ones -- suffer from perverse psychology.

 

It's funny, because most investors on this board want their fund managers to run their fund with little consideration for short-term volatility and to maximize long-term gain.  Yet, when the manager actually follows that philosophy, the same investors are the first ones running for the lifeboats.  That perverse psychology is what makes running a fund very, very difficult unless you have longer term lockups. 

 

I was fielding a couple calls last October, November from clients who thought we were going over the cliff.  That Great Depression II was around the bend.  They were pulling money from every manager they had money with.  After a couple of hours on the phone, calming them and assuring them that we weren't, they felt a bit more at ease.  Sadly, they said they would leave their capital with us, but pull from every other manager they had capital with.  I explained that this wasn't a good idea.  I can only imagine the calamity they have created around themselves.  And these are "sophisticated" investors who have owned Berkshire, etc for years.  When volatility strikes, it is just so difficult for people to control their emotions. 

 

Berkowitz was down 32%, but the fund assets have dropped 70%!  Those same people are now paying the price on the way back up.  I can only imagine how many of Mohnish's clients would have made the God-awful move of pulling their capital at the bottom when he was down 70%.  Instead, many of them were saved from themselves by the lockup in place.  Cheers! 

[leftcoast]

That perverse psychology is what makes running a fund very, very difficult unless you have longer term lockups. 

 

Fairholme's tag line is "Ignore the Crowd," but I guess the question is how do you do that when your own investors are "the crowd"?

 

Just curious (as a non-investment professional)... what's the attraction of running a mutual fund vs. a hedge fund? Doesn't seem like the administrative costs would be any lower, and for a manager like Berkowitz, the inability to manage inflows and outflows seems like it just adds all kinds of hurdles to performance. So what's the upside? Is it just that it's easier to acquire new AUM when you want to grow? Easy come, easy go.